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Following a heavy volume flush and reversal around midnight ET, gold prices surged today. The 3.3% rally is the best day since September 2013.
Best day in 14 months…
With a big flush reversal overnight…
With GOFO at its most negative since 2001… indicating 'scarcity' of physical gold among institutions
And ETF holdings slammed back to levels first seen in March 2009…
Charts: Bloomberg
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Stocks end the week on a weaker note roundtripping off premature exuberance into the European close after jobs data that missed expectations (or did they). Of course the kneejerk response took the S&P and Dow to record highs before the weakness set in. Thanks to a late day panic-buying rip though, Nasdaq and Russell 2000 close the week unch – no need to call Mr. Bullard. Treasury yields collapsed today, ending the week down around 3-4bps. The USD sold off today to close the week up 0.6% with JPY and AUD the weakest against the greenback on the week. Gold (and silver) rallied to close the week almost unchanged. Interestingly, despite VIX's best efforts (almost breaking under 13), stocks rolled over this afternoon (then ripped). Oil prices pushed modestly higher early on and ended the day around $78.50. The ubiquitous Friday late-day buying panic ripped everything higher – on absolutely no news – "proving" that the jobs data was great (expect, why were safe haven bond and bullion so heavily bid?)
On the week Trannies surged and thanks to some late day mania, Nasdaq and Russell managed to creep back into the green
From the Payrolls print…
Treasuries and stocks decoupled into the European close… then stocks caught down…
VIX and Stocks decoupled this afternoon
Treasury yields collapsed today to end the week lower…
The Dollar rallied on the week but ended red today…
Gold and silver soared today. Gold into the green on the week…
Big Reversal in gold
Charts: Bloomberg
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Submitted by Andy Tully via OilPrice.com,
When we think of electric cars, probably the first thing that comes to mind is the Chevrolet Volt, which is smooth running but needs frequent recharging. Plus it’s no speed demon.
But if you think electric cars still deserve consideration, take a look at the “Grimsel,” the creation of the technical schools ETH Zurich and Lucerne University of Applied Sciences and Arts. On Nov. 3 the students put the spurs to the car and got it to accelerate from 0 to 100 kilometers per hour (62 mph) in 1.785 seconds, using less than 30 meters of track.
That’s nearly twice as fast as Tesla’s fleet Model S P85D. And it’s record-breaking.
One of the 30 students from the two schools, all members of the formula Student team at the Academic Motorsports Club Zurich (AMZ), had the Grimsel roaring down a runway at the military airfield in Duebendorf to beat the old record of 0-to-100 kph in 2.134 seconds that had been held by an electric car built by the Netherlands’ Delft University of Technology.
The new record is awaiting ratification by the Guinness Book of World Records.
The car itself is a Formula Student vehicle designed and constructed in less than a year by students at both ETH and Lucerne. The record-breaking car, the fifth iteration of the students’ continuing research, packs 200 horsepower and its chassis is a one-piece carbon-fiber shell, strong and light. It weighs 370 pounds.
The rubber meets the road with tires measuring 7.5 inches in width attached to the hubs with one-piece, again made from strong, light carbon fiber.
Grimsel is a four-wheel-drive vehicle, though probably not meant for driving in inclement weather or over rough terrain, but for efficient speed. Each wheel hub is fitted with special electric motors which together generate 1,202 foot-pounds of torque. The car distributes torque individually to each wheel to optimize acceleration while minimizing wheel spin.
ETH Zurich says this is the strongest acceleration of any other production vehicle ever made.
This wasn’t the first success for the “Grimsel.” During the summer it also won several races at the Formula Student international competition. More than 500 teams are represented at Formula Student, the world’s largest such event for engineers held each year in a different country.
“Grimsel” managed three wins in the 2014 competition and racked up an average of 920 points out of a possible 1,000, making it so far the most successful car designed and built by AMZ. The car also had a victory each in Austria and Spain, and by winning both races it earned the highest scores in the European history of Formula Student.
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But… but… that weak jobs report was so very strong. Who could have possibly seen that coming?
Chart: Bloomberg
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Another month, another $14.5 billion increase in student and car loans, offset by a measly $1.4 billion in credit card debt, following last month’s upward revised $200 million drop in revolving debt. Total consumer debt in September increase by $15.9 billion, just below the $16.0 billion estimate, and the problem is that with the Fed’s credit injection fading, someone has to step on the borrowing pedal. Alas, if one takes away student and car loans, the credit creation is not nearly enough to push US consumption higher.
Revolving credit: the credit card buying spree from late spring is long gone. Compared the recent “recovery” period to the “healthy” credit card purchasing days of 2007 reveals that nothing is as it should be.
So it’s all up to non-revolving credit, which continues to increase between $10 and $15 billion each month.
What’s most troubling is that after several months of depository institutions funding the bulk of credit needs, the past two months have reverted to the old normal, where Uncle Sam is the sole provider of consumer credit.
In any event, the most amusing chart is the following. It simply screams sustainable.
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Guess that sale of Roubini’s RGE consultancy didn’t go quite as planned. Recall from three years ago:
It seems that everyone’s favorite Dr.Doom is selling his consultancy after only several years of operation, David Faber reports. The consultancy, according to confidential sales materials, will generate $11MM in revenue and $2MM of losses. The bulk of clients of the 85 person shop, Faber reports, is corporations, not actual investors, making the buyside wonder “who incremental clients will be.” We wonder just how any potential buyer will be able to lock up Roubini for several years, without whose presence RGE will have questionable going concern value. We wish @Nouriel the best of luck in his sales process, whose successful conclusion (or otherwise) probably means that Roubini will end up as a blogger and paid panelist.
We should have added “newsletter writer” because moments ago Dr Doom unveiled… Nouriel Unplugged.
From Roubini:
Dear friends,
Throughout my 25-year career as a macroeconomist, my work has been to interpret conflicting economic and market signals. In short, to make sense of the data inside of the noise – either in an academic setting or for governments and institutional investors.
Today it’s my great pleasure to introduce you to a new direction in my research – dedicated specifically to individual investors – and the launch of my most personal project yet.
In the nearly seven years since the beginning of the Great Recession, one of the questions I’m most frequently asked is about the role that macroeconomics plays in the lives of individual investors – and more specifically, which economic information relates directly to their lives.
This is a critically important question and one that my work – which has been applied to academic and institutional macroeconomic research – has not, until now, explored.
During the last year, I have given a great deal of thought to how best to answer this question. How to develop new ways of making the ideas that I’m most passionate about available to individual investors and readers such as you, who are interested in the global economy.
My goal has been to create a new format that’s less technical, more conversational, and engages the curiosity of a wider audience, all with the aim of providing the news and information I think is most important to your financial future.
With that goal in mind, I’ve decided to create a letter dedicated to individual investors, called Nouriel Unplugged. Because of the current and ongoing uncertainties in the global economy, understanding macroeconomic trends is of paramount importance to the individual – and that’s the reason why I am making this letter available free of charge.
As I travel, sometimes the most important lessons I learn occur in the moments between policy and business meetings. Nouriel Unplugged ties together those stories – economics, culture, politics, government, art, and society – to tell a story that can’t be conveyed with the traditional use of economic data alone.
In short, in Nouriel Unplugged, my goal is to not only tell the stories behind the data but to explain how they relate to you.
Recently, I sat down with journalist Salimah Ebrahim for a five-part series of video interviews that are well worth watching. Topics run the gamut from the lack of financial literacy in the Western world, to what is in store for emerging markets, to the regrettable level of dysfunction in Washington, DC, and more.
As soon as these videos are posted on the Roubini’s Edge site, you will receive an email with a video link in your inbox, for your viewing pleasure.
It’s very exciting for me to begin a new phase of my career – talking to individual investors about the challenges and opportunities that a macroeconomic perspective on the markets can provide.
As one of my readers, you don’t have to take any action to begin receiving Nouriel Unplugged – each issue will be delivered to your email inbox biweekly, free of charge. Of course, if you would prefer not to receive Nouriel Unplugged, please feel free to opt out by clicking here.
I’m delighted to have you follow along with me in my future travels via Nouriel Unplugged, where I will share my impressions of the places I visit and the broader ideas that shape our world and drive our financial markets.
I look forward to continuing our conversation in the near future.
Cordially,
Nouriel Roubini
Chairman
Roubini’s Edge
If Roubini’s newsletter is even remotely as valuable as Gartman’s, we can already predict (with the appropriate hockeystick chart of course) the first billionaire economist in the world.
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If you like your boots-on-the-ground, you can keep them… and have some more. Whether a strawman or not, Reuters reports that according to US officials, the U.S. military has drawn up plans to significantly increase the number of American forces in Iraq, which now total around 1,400, as Washington seeks to bolster Iraqi forces battling the Islamic State.
The U.S. military has drawn up plans to significantly increase the number of American forces in Iraq, which now total around 1,400, as Washington seeks to bolster Iraqi forces battling the Islamic State, U.S. officials told Reuters on Friday.
The officials, speaking on condition of anonymity, declined to offer details. The United States aims to help advise and train Iraqi and Kurdish forces battling Islamic State fighters who swept into much of northern Iraq.
* * *
The Obama administration is prepared to almost double the American military presence in Iraq to 3,000, sources told NBC News on Friday.
The current figure is about 1,600. The sources said that an increase to 3,000 was among several options under consideration. There is no plan to include ground combat forces in the additional deployments, they said.
The additional troops are needed to expand the military’s role in training and helping Iraqi forces, including the highly volatile part of Anbar Province under the control of ISIS, the sources said.
The White House and Pentagon were expected to announce further details later Friday.
* * *
So The US must be ‘winning’ against ISIS if they need more humanitarian military advisor non-boots-on-the-ground troops…?
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“Surprises like this are poison to the stock market, and this is one of the big surprises,” exclaims the head of listing for Nasdaq’s Copenhagen exchange as OW Bunker A/S – a marine fuel bunker company – went from $1 billion-plus IPO in April to bankruptcy today.
From $1billion IPO to bankruptcy in just over 6 months…
Investors in OW Bunker A/S woke up to a string of horrors yesterday.
OW Bunker, which provides fuel to the marine industry, said on Wednesday shortly before midnight that it had lost $275 million through a combination of fraud committed by senior executives at its Singapore office and poor risk management. Its shares have been suspended since Nov. 5 and the company says its equity has been wiped out.
Just eight months ago, investors drove OW Bunker’s shares up 21 percent in their first day of trading, following an initial public offering that valued it at almost $1 billion.
“There’s no doubt this case is damaging to investors and the stock market,” Borring said. “The stock market depends deeply on the relationship of trust between investors and companies.”
According to Niels Henrik Jensen, chairman of OW Bunker, the Singapore employee behind the alleged fraud “turned up at the company’s office and told his manager” what he’d done. Jensen declined to provide more details.
“I can’t speculate on how long this has been going on, I didn’t speak to the man myself,” he said. “We’re still not sure whether this was actually illegal — that’s being investigated.”
…
The company said it lost $125 million through the alleged fraud at its Singapore office. Separate from that, it said it also lost $150 million following a “significant risk management loss” and has as a result fired its head of risk management, Jane Dahl Christensen.
The banks who helped bring OW Bunker to market all say they’re as shocked as anyone else by its revelations over the past two days.
* * *
And then today…
Consequences?
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Submitted by Marin Katusa via Casey Research,
Back on September 11 and 12, there was a summit meeting in a city that involved an organization that most Americans have never heard of. Mainstream media coverage was all but nonexistent.
The place was Dushanbe, the capital of Tajikistan, a country few Westerners could correctly place on a map.
But you can bet your last ruble that Vladimir Putin knows exactly where Tajikistan is. Because the group that met there is the Russian president’s baby. It’s the Shanghai Cooperation Organization (SCO), consisting of six member states: Russia, China, Kazakhstan, Kyrgyzstan, Tajikistan, and Uzbekistan.
The SCO was founded in 2001, ostensibly to collectively oppose extremism and enhance border security. But its real reason for being is larger. Putin sees it in a broad context, as a counterweight to NATO (a position that the SCO doesn’t deny, by the way). Its official stance may be to pledge nonalignment, nonconfrontation, and noninterference in other countries’ affairs, but—pointedly—the members do conduct joint military exercises.
Why should we care about this meeting in the middle of nowhere? Well, obviously, anything that Russia and China propose to do together warrants our attention. But there’s a whole lot more to the story.
Since the SCO’s inception, Russia has been treading somewhat softly, not wanting the group to become a possible stalking horse for Chinese expansion into what it considers its own strategic backyard, Central Asia. But at the same time, Putin has been making new friends around the world as fast as he can. If he is to challenge US global hegemony—a proposition that I examine in detail in my new book, The Colder War—he will need as many alliances as he can forge.
Many observers had been predicting that the Dushanbe meeting would be historic. The expectation was that the organization would open up to new members. However, expansion was tabled in order to concentrate on the situation in Ukraine. Members predictably backed the Russian position and voiced support for continuing talks in the country. They hailed the Minsk cease-fire agreement and lauded the Russian president’s achievement of a peace initiative.
However, the idea of adding new members was hardly forgotten. There are other countries which have been actively seeking to join for years. Now, with the rotating chairmanship of the organization passing to Moscow—and with the next summit scheduled for July 2015 in Ufa, Russia—conditions could favor the organization’s expansion process truly taking shape by next summer, says Putin.
To that end, the participants in Dushanbe signed documents that addressed the relevant issues: a “Model Memorandum on the Obligations of Applicant States for Obtaining SCO Member State Status,” and “On the Procedure for Granting the Status of the SCO Member States.”
This is extremely important, both to Russia and the West, because two of the nations clamoring for inclusion loom large in geopolitics: India and Pakistan. And waiting in the wings is yet another major player—Iran.
In explaining the putting off of a vote on admittance for those countries, Putin’s presidential aide Yuri Ushakov was candid. He told Russian media that expansion at this moment is still premature, due to potential difficulties stemming from the well-known acrimony between India and China, and India and Pakistan, as well as the Western sanctions against Iran. These conflicts could serve to weaken the alliance, and that’s something Russia wants to avoid.
Bringing longtime antagonists to the same table is going to require some delicate diplomatic maneuvering, but that’s not something Putin has ever shied away from. (Who else has managed to maintain cordial relationships with both Iran and Israel?)
As always, Putin is not thinking small or short term here. Among the priorities he’s laid out for the Russian chairmanship are: beefing up the role of the SCO in providing regional security; launching major multilateral economic projects; enhancing cultural and humanitarian ties between member nations; and designing comprehensive approaches to current global problems. He is also preparing an SCO development strategy for the 2015-2025 period and believes it will be ready by the time of the next summit.
We should care what’s going on inside the SCO. Once India and Pakistan get in (and they will) and Iran follows shortly thereafter, it’ll be a geopolitical game changer.
Putin is taking a leadership role in the creation of an international alliance among four of the ten most populous countries on the planet—its combined population constitutes over 40% of the world’s total, just short of 3 billion people. It encompasses the two fastest-growing global economies. Adding Iran means its members would control over half of all natural gas reserves. Development of Asian pipeline networks would boost the nations of the region economically and tie them more closely together.
If Putin has his way, the SCO could not only rival NATO, it could fashion a new financial structure that directly competes with the IMF and World Bank. The New Development Bank (FKA the BRICS Bank), created this past summer in Brazil, was a first step in that direction. And that could lead to the dethroning of the US dollar as the world’s reserve currency, with dire consequences for the American economy.
As I argue in The Colder War, I believe that this is Putin’s ultimate aim: to stage an assault on the dollar that brings the US down to the level of just one ordinary nation among many… and in the process, to elevate his motherland to the most exalted status possible.
What happened in Tajikistan this year and what will happen in Ufa next summer—these things matter. A lot.
* * *
Perhaps no one knows how dangerous Vladimir Putin is and how much he controls the flow of capital in the global energy trade than author of The Colder War, Marin Katusa.
Marin stakes millions on his deep knowledge of energy and politics. And as a result, his hedge funds have outperformed the TSXV index by 6-fold over the past 5 years. To discover everything Putin is planning and how it will directly affect you, click here to get a copy of Marin's brand new book, The Colder War.
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For some reason, the Council of Foreign Relations, where ex-Fed-Chief Alan Greenspan spoke last week, decided the following discussion should be left out of the official transcript. We can perhaps understand why… as Gillian Tett concludes, "comments like that will be turning you into a rock star amongst the gold bug community."
Greenspan (Uncut):
TETT: Do you think that gold is currently a good investment?
GREENSPAN: Yes… Remember what we're looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can macth it.
Which is missing from the official CFR transcript…
GREENSPAN: …remember, we had that first tapering discussion, we got a very strong market response. And then we reassured everybody to have no — remember, tapering is still (audio gap) of an agreement that the central banks have made — European central banks, I believe — about allocating their gold sales which occurred when gold prices were falling down (audio gap) has been renewed this year with a statement that gold serves a very important place in monetary reserves.
And the question is, why do central banks put money into an asset which has no rate of return, but cost of storage and insurance and everything else like that, why are they doing that? If you look at the data with a very few exceptions, all of the developed countries have gold reserves. Why?
TETT: I imagine right now, it's because of a question mark hanging over the value of fiat currency, the credibility going forward.
GREENSPAN: Well, that's what I'm getting at. Every time you get some really serious questions, the 50 percent of the gold price determination begins to move.
TETT: Right.
GREENSPAN: And I think it is fascinating and — I don't know, is Benn Steil in the audience?
TETT: Yes.
GREENSPAN: There he is, OK. Before you read my book, go read Benn's book. The reason is, you'll find it fascinating on exactly this issue, because here you have the ultimate test at the Mount Washington Hotel in 1944 of the real intellectual debate between the — those who wanted to an international fiat currency which was embodied in John Maynard Keynes' construct of a banker, and he was there in 1944, holding forth with all of his prestige, but couldn't counter the fact that the United States dollar was convertible into gold and that was the major draw. Everyone wanted America's gold. And I think that Benn really described that in extraordinarily useful terms, as far as I can see. Anyway, thank you.
TETT: Right. Well, I'm sure with comments like that, that will be turning you into a rock star amongst the gold bug community.
* * *
As a reminder, here is Ben Bernanke putting people straight on Gold…
Ron Paul asks the Bernanke if he thought gold was money. Bernanke almost swallows his tongue, stares blankly for a few seconds and then says, “no.”
Paul then asks why banks hold gold on their balance sheet? Why not diamonds? Bernanke says, “tradition, I suppose.”
So let me get this straight, banks hold billions of dollars of an asset that pays no interest or dividends on their balance sheet for reasons of "tradition". nothing to do with anything else, just tradition. uh, yea. That must be it.
* * *
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