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Silver and gold were slammed early in the European day but have now recovered those modest losses to extend their winning streak. Gold is holding above $1,320 but Silver is outperforming +1.4% today and is now up 13 days in a row… this is the longest winning streak since at least 1968. Both gold and silver have broken through their 200-day moving averages (and the often-watched 150-day).
Charts: Bloomberg
via Zero Hedge http://ift.tt/1nKtECm Tyler Durden
While we will have more to say about the disastrous December TIC data shortly, which was released early today, and which showed a dramatic plunge in foreign purchases of US securities in December – the month when the S&P soared to all time highs and when everyone was panicking about the 3% barrier in the 10 Year being breached and resulting in a selloff in Tsy paper – one thing stands out. The chart below shows holdings of Chinese Treasurys (pending revision of course, as the Treasury department is quite fond of ajdusting this data series with annual regularity): in a nutshell, Chinese Treasury holdings plunged by the most in two years, after China offloaded some $48 billion in paper, bringing its total to only $1268.9 billion, down from $1316.7 billion, and back to a level last seen in March 2013!
This was the second largest dump by China in history with the sole exception of December 2011.
That this happened at a time when Chinese FX reserves soared to all time highs, and when China had gobs of spare cash lying around and not investing in US paper should be quite troubling to anyone who follows the nuanced game theory between the US and its largest external creditor, and the signals China sends to the world when it comes to its confidence in the US.
Yet what was truly surprising is that despite the plunge in Chinese holdings, and Japanese holdings which also dropped by $4 billion in December, is that total foreign holdings of US Treasurys increased in December, from $5716.9 billion to 5794.9 billion.
Why? Because of this country. Guess which one it is without looking at legend.
That’s right: at a time when America’s two largest foreign creditors, China and Japan, went on a buyers strike, the entity that came to the US rescue was Belgium, which as most know is simply another name for… Europe: the continent that has just a modest amount of its own excess debt to worry about. One wonders what favors were (and are) being exchanged behind the scenes in order to preserve the semblance that “all is well”?
via Zero Hedge http://ift.tt/1nKhPMu Tyler Durden
Surprise! For the 3rd time in the last 20 years, homebuilder sentiment got way ahead of reality… and as the February NAHB data shows, reality is starting to catch up to them. The NAHB sentiment index crashed by its most on record in Feb, missed expectations by its most on record, and fell back below the crucial 50-level, as it starts to play cyclical catch-down to home sales and mortgage apps. Think it's the weather? nope…It's across every region (with The West dropping the most on record – hot dry weather?) And this after Trulia (that entirely independent provider of perspective) said " Severe winter weather may cause housing activity to wobble, but cold, rain, and snow won’t hobble the housing recovery." It appears it has…
Yet again hope fades…
Biggest miss and biggest drop on record….
The West dropped more than the cold-weather-affected areas of the country – we assume that warm, dry weather is detrimental to home-buying in some way?
And here's what Trulia told everyone…
Winter Weather is a Wobble, not a Hobble
Here’s what the weather wobble means for interpreting the forthcoming January construction and sales data. Because the weather had a slight negative impact on housing activity, flat month-over-month numbers for construction or sales would mean that other market forces were strong enough to offset the negative effect of bad weather. But if housing activity fell month-over-month in January by more than the predicted weather effect, don’t pin the entire drop on the cold.
That means if existing home sales fall by 5% month-over-month in January, for example, then only a bit of decline (1.1%) should be blamed on weather. The regional patterns in housing activity will also help reveal whether weather mattered. The impact of January’s weather on starts should be most negative in the Northeast and Midwest, so if starts decline most in the South and West, then weather’s not the culprit. Finally, housing activity tends to bounce partway back the month after bad weather (unless that next month is unusually bad, too). Rain and cold don’t last forever, and neither do their effects on housing.
Therefore, bad winter weather will only delay some construction and sales activity, rather than make it disappear. Severe winter weather may cause housing activity to wobble, but cold, rain, and snow won’t hobble the housing recovery.
A 10-sigma wobble!!!!
via Zero Hedge http://ift.tt/1bIynok Tyler Durden
Despite the ongoing efforts of the rest of the world to ignore what is rapidly escalating into a potential pivot point in global geopolitics, Ukraine has gone from bad to worse in the last few hours:
The riot police have been told to 'impose order by all means envisaged' and it appears they are rapidly moving towards that goal.
Live Feed:
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Via Reuters,
Ukrainian security forces on Tuesday set protesters a 6 p.m. 1600 gmt) deadline to end street disturbances or face "tough measures", a statement said.
The State Security Service (SBU), in a joint statement with the interior ministry, said: "If by 6 p.m. the disturbances have not ended, we will be obliged to restore order by all means envisaged by law.
"If the disturbances continue we will be forced to resort to tough measures," it said.
The statement followed a day of violence in the Ukrainian capital Kiev as protesters clashed violently with police near the parliament building, with unconfirmed reports of three people being killed.
via Zero Hedge http://ift.tt/O3Z9Nn Tyler Durden
Submitted by Ron Paul of The Ron Paul Institute,
Last week, Federal Reserve Chairman Janet Yellen testified before Congress for the first time since replacing Ben Bernanke at the beginning of the month. Her testimony confirmed what many of us suspected, that interventionist Keynesian policies at the Federal Reserve are well-entrenched and far from over. Mrs. Yellen practically bent over backwards to reassure Wall Street that the Fed would continue its accommodative monetary policy well into any new economic recovery. The same monetary policy that got us into this mess will remain in place until the next crisis hits.
Isn’t it amazing that the same people who failed to see the real estate bubble developing, the same people who were so confident about economic recovery that they were talking about “green shoots” five years ago, the same people who have presided over the continued destruction of the dollar’s purchasing power never suffer any repercussions for the failures they have caused? They treat the people of the United States as though we were pawns in a giant chess game, one in which they always win and we the people always lose. No matter how badly they fail, they always get a blank check to do more of the same.
It is about time that the power brokers in Washington paid attention to what the Austrian economists have been saying for decades. Our economic crises are caused by central bank infusions of easy money into the banking system. This easy money distorts the structure of production and results in malinvested resources, an allocation of resources into economic bubbles and away from sectors that actually serve consumers’ needs. The only true solution to these burst bubbles is to allow the malinvested resources to be liquidated and put to use in other areas. Yet the Federal Reserve’s solution has always been to pump more money and credit into the financial system in order to keep the boom period going, and Mrs. Yellen’s proposals are no exception.
Every time the Fed engages in this loose monetary policy, it just sows the seeds for the next crisis, making the next crash even worse. Look at charts of the federal funds rate to see how the Fed has had to lower interest rates further and longer with each successive crisis. From six percent, to three percent, to one percent, and now the Fed is at zero. Some Keynesian economists have even urged central banks to drop interest rates below zero, which would mean charging people to keep money in bank accounts.
Chairman Yellen understands how ludicrous negative interest rates are, and she said as much in her question and answer period last week. But that zero lower rate means the Fed has had to resort to unusual and extraordinary measures: quantitative easing. As a result, the Fed now sits on a balance sheet equivalent to nearly 25 percent of US GDP, and is committing to continuing to purchase tens of billions more dollars of assets each month.
When will this madness stop? Sound economic growth is based on savings and investment, deferring consumption today in order to consume more in the future. Everything the Fed is doing is exactly the opposite, engaging in short-sighted policies in an attempt to spur consumption today, which will lead to a depletion of capital, a crippling of the economy, and the impoverishment of future generations. We owe it not only to ourselves, but to our children and our grandchildren, to rein in the Federal Reserve and end once and for all its misguided and destructive monetary policy.
via Zero Hedge http://ift.tt/N66ISB Tyler Durden
Submitted by Ron Paul of The Ron Paul Institute,
Last week, Federal Reserve Chairman Janet Yellen testified before Congress for the first time since replacing Ben Bernanke at the beginning of the month. Her testimony confirmed what many of us suspected, that interventionist Keynesian policies at the Federal Reserve are well-entrenched and far from over. Mrs. Yellen practically bent over backwards to reassure Wall Street that the Fed would continue its accommodative monetary policy well into any new economic recovery. The same monetary policy that got us into this mess will remain in place until the next crisis hits.
Isn’t it amazing that the same people who failed to see the real estate bubble developing, the same people who were so confident about economic recovery that they were talking about “green shoots” five years ago, the same people who have presided over the continued destruction of the dollar’s purchasing power never suffer any repercussions for the failures they have caused? They treat the people of the United States as though we were pawns in a giant chess game, one in which they always win and we the people always lose. No matter how badly they fail, they always get a blank check to do more of the same.
It is about time that the power brokers in Washington paid attention to what the Austrian economists have been saying for decades. Our economic crises are caused by central bank infusions of easy money into the banking system. This easy money distorts the structure of production and results in malinvested resources, an allocation of resources into economic bubbles and away from sectors that actually serve consumers’ needs. The only true solution to these burst bubbles is to allow the malinvested resources to be liquidated and put to use in other areas. Yet the Federal Reserve’s solution has always been to pump more money and credit into the financial system in order to keep the boom period going, and Mrs. Yellen’s proposals are no exception.
Every time the Fed engages in this loose monetary policy, it just sows the seeds for the next crisis, making the next crash even worse. Look at charts of the federal funds rate to see how the Fed has had to lower interest rates further and longer with each successive crisis. From six percent, to three percent, to one percent, and now the Fed is at zero. Some Keynesian economists have even urged central banks to drop interest rates below zero, which would mean charging people to keep money in bank accounts.
Chairman Yellen understands how ludicrous negative interest rates are, and she said as much in her question and answer period last week. But that zero lower rate means the Fed has had to resort to unusual and extraordinary measures: quantitative easing. As a result, the Fed now sits on a balance sheet equivalent to nearly 25 percent of US GDP, and is committing to continuing to purchase tens of billions more dollars of assets each month.
When will this madness stop? Sound economic growth is based on savings and investment, deferring consumption today in order to consume more in the future. Everything the Fed is doing is exactly the opposite, engaging in short-sighted policies in an attempt to spur consumption today, which will lead to a depletion of capital, a crippling of the economy, and the impoverishment of future generations. We owe it not only to ourselves, but to our children and our grandchildren, to rein in the Federal Reserve and end once and for all its misguided and destructive monetary policy.
via Zero Hedge http://ift.tt/N66ISB Tyler Durden
The banker suicide wave that started in late January has now become an epidemic, and it seems to be focusing on one bank: JP Morgan.
After the first suicide that took place in JPM’s London headquarters, ending the life of 39 year old Gabriel Magee, a vice president in the investment bank’s technology department, next it was 37 year old Ryan Crane, an executive director in the firm’s program trading division, who died under still unknown circumstances.
Moments ago a third JPMorgan banker committed suicide, this time at the JPMorgan Charter House Asia headquarters in central Hong Kong, where a 33 year old man who was said to have been an FX trader for JPM, just jumped to his death.
Not much is known yet about the circumstances of the suicide, however according to early reports, the man was 33-years-old, surnamed Lee, and believed to be a forex trader for JP Morgan.
Commuters noticed the man at the top of Chater House around 2pm to 3pm in the afternoon and called the police but policemen who arrived at the scene failed to convince the man not to jump. The deceased was sent to the hospital immediately but was pronounced dead on arrival. As several lanes on Connaught Road Central were closed because of the incident, traffic in the area were chaotic.
The man stands on the roof of Chater House in Central as
police try to talk him down. Photo: SCMP Pictures
An investment banker on Tuesday jumped to his death from the roof of Chater House in Central, where Wall Street bank JP Morgan has its Asia headquarters, several witnesses told the South China Morning Post.
Witnesses said the man initially went to the roof of Chater House, a 30-floor building in the heart of Hong Kong’s central business district – and later jumped. The incident happened between 2pm and 3pm, one witness said.
Several policemen were seen on the roof but apparently failed to convince the man not to jump, one of the witnesses said. Police later confirmed to the Post that a 33-year-old man – surnamed Li – was found in a dangerous position on the roof of Chater House on Connaught Road Central at 2.08pm local time. Li threw himself off the building before the city’s emergency crew arrived.
The man landed on the four-lane western-bound carriageway outside the building. A police spokeswoman said Li was taken to Ruttonjee Hospital, where he was declared dead at 2.31pm. Police are investigating the case.
According to several JP Morgan employees, the man was a junior-level investment banker who played a supporting role on various projects.
A Hong Kong-based JP Morgan spokeswoman said the bank was aware of the incident but it could not confirm at this stage whether the deceased was an employee of the bank. The bank is working with other parties including the police and the property manager of Chater House to follow up on the case, she added.
“There were lots of police, ambulance cars and even some firefighters at the scene, right in front of Chater House,” said one witness, a security guard at Jardine House, an office building opposite Chater House in Central.
“Connaught Road Central was blocked for nearly two hours in the afternoon,” he added.
Another witness working for a financial firm in Jardine House said he and his colleagues were having coffee at a nearby Starbucks when the suicide happened. They heard a heavy sound suddenly from the ground and later realised it was a man who jumped to his death.
“We thought it might have been a car tyre [exploding]. It’s sad to know it is a suicide case,” he said.
The incident apparently had some internal impact on JP Morgan’s business activities in Hong Kong – at least one business meeting was cancelled immediately after the suicide happened.
According to one manager working for a British bank in Hong Kong, his team were originally scheduled for a meeting with JP Morgan at 3pm but it was suddenly cancelled without explanation.
JP Morgan takes up 10 floors, from the 20th to 29th, of Chater House, one of the financial district’s landmark high-rises. It is the main regional head office location for the bank, which also houses its staff in Hong Kong in several other buildings across the city. Chater House also carries the logo of JP Morgan on the top corner of the building.
Hong Kong’s On.cc Released photos of the suicide below (warning: graphic).
Perhaps what is most notable about this particular death is the reference that the man was involved with FX trading: as is well-known, this is a hot topic for banks around the world, as it is expected to be the next Libor-manipulation like bonanza for regulators and enforcers. Did he know too much?
Finally, via Financial Post, here is a chronological summary of all recent banker deaths:
Sunday, Jan. 26: London police found William Broeksmit, a 58-year-old former senior executive at Deutsche Bank AG, dead in his home after an apparent suicide.
Monday, Jan. 27: Tata Motors managing director Karl Slym died after falling from a hotel room in Bangkok in what police said could be possible suicide. Slym, 51, had attended a board meeting of Tata Motors’ Thailand unit in the Thai capital and was staying with his wife in a room on the 22nd floor of the Shangri-La hotel. Hotel staff found his body on Sunday on the fourth floor, which juts out above lower floors.
Tuesday, Jan. 28: a 39-year-old JPMorgan employee died after falling from the roof of the European headquarters of JPMorgan in London. The man, Gabriel Magee, was a vice president in the investment bank’s technology department, a source told WSJ.
Wednesday, January 29: Russell Investments’ Chief Economist Mike Dueker was found dead in an apparent suicide. Police said it appears Dueker took his own life by jumping from a ramp near the Tacoma Narrows Bridge in Tacoma, Wash., AP reported. According to Bloomberg, Dueker, 50, had been missing since Jan. 29, and friends and law enforcement had been searching for him.
The week before, a U.K.-based communications director at Swiss Re AG died. The cause of death has not been made public.
Monday, February 3: 37-year-old JPMorgan Chase & Co executive director who died from unknown causes Feb. 3 appears to be the latest in a series of untimely deaths among finance workers and business leaders around the world in the past three weeks. Ryan Crane, a JPMorgan Chase & Co. employee who in a 14-year career at the New York-based bank rose to executive director of a unit that trades blocks of stocks for clients, died in his Stamford, Connecticut, home.
Tuesday, February 18: 33-year old JPMorgan forex trader is the latest in a string of suicides to take his life in Hong Kong.
via Zero Hedge http://ift.tt/1clDQzf Tyler Durden
Winter storms and cold weather dominated much of January and somehow Empire State managed its greatest beat in a year; however, we are sure the weather will be blamed for the biggest miss in 3 months for the data in Feb (printing 4.48 vs expectations of 8.5). New Orders tumbled from 10.98 to -0.21; inventories plunged, and expectations for the average work week and future Capex spend expectations collapsed to their lowest since July 09.The drop from January’s exuberance is the largest in 18 months.
Biggest drop in 18 months
Future Capex spend expectations drop to lowest since July 2009!
Of course, the weather will be blamed but we struggle to understand how expetations for 6-months forward capital expenditure will be so negatively affected by some snow in February!
Charts: Bloomberg
via Zero Hedge http://ift.tt/1jNCMZQ Tyler Durden
Nearly two months ago, when we commented on the recent string of unprecedented failures by the ECB to sterilize its legacy bond buying operation, the SMP, we commented that “judging by the feverish pace of purchases of every peripheral bond available, is this merely just another indication how little the ECB cares about sterilization, and is just a hint at an upcoming full-blown and unsterilized bond monetization about to be launched by Mario Draghi?” Sure enough at the subsequent February 6 ECB meeting Mario Draghi hinted as much when he said that among the things the ECB was looking at was precisely the “de”sterilizing of the SMP program. However, one stumbling block was getting the Bundebsbank’s tacit approval to proceed with this plan which would make the ECB’s bond monetization mirror that of the Fed where bonds are purchased on an unsterilized basis. And, as expected, overnight the Bundesbank threw in the towel on sterilization, meaning that the SMP will no longer be sterilized with an announcement divulging just this likely as soon as the next ECB meeting.
From the WSJ:
Germany’s central bank said Monday it would support suspending the European Central Bank’s nearly four-year-old policy of draining funds from euro-zone banks to offset the ECB’s government-bond holdings, saying the shift would stabilize money markets and cement the bank’s pledge to maintain an ultra-loose monetary policy. The Bundesbank’s stance, contained it its monthly report, would likely give the ECB cover in Germany if it decides to take this course. The weekly funding drains, known as sterilizations, helped to shield the ECB from criticism that it printed fresh money to bail out struggling countries such as Greece and Italy.
This concern is particularly pronounced in Germany, where purchases of government debt stir deep-rooted fears of inflation and a loss of central bank independence. The Bundesbank opposed both of the ECB’s bond-purchase plans in 2010 and 2012. By ending the weekly funding drains, the ECB would potentially leave an extra €175 billion ($239.6 billion) in the banking system, which in turn may reduce the rates banks charge each other for short-term cash.
The Bundesbank said in its monthly report that it “is open-minded about a possible adjustment of the current liquidity absorbing operations when it is appropriate to stabilize the money market and liquidity conditions.”
Such a move, it said, would “signal the accommodative monetary policy stance of the Eurosystem even clearer than before.” The Eurosystem refers to the ECB and 18 national central banks in the euro zone. The ECB has pledged to keep interest rates at their present record lows, or reduce them further, for an extended period
One implication, of course, is on European money-market rates which have been volatile in recent months and the result would be at least some short-term anchoring.
Analysts said that while suspending the weekly drains would have a short-term effect in anchoring money-market rates, it may not prove long-lasting. Because banks can also borrow unlimited amounts of money from the ECB, they may simply keep the extra funds and borrow less from the central bank, leaving the money supply largely stable.
A bigger question is whether now that sterilization is effectively history, will this open the gates for full-blown QE which the market has been largely anticipating for months, roughly since November when we penned “Next From The ECB: Here Comes QE, According To BNP” and which argued that in order to deal with Europe’s record low loan creation the ECB would have no choice but to step in and do just what the Fed has been doing to battle the same scourge: monetize assets outright in hopes of offsetting the monetary pipeline blocks that have haunted Europe for the past 5 years. Of course, that will not work and will merely send European stocks to recorder highs, even if the recent surge in Europe has been largely driven by the market pricing in of just this outcome. Another question is when will ECB unsterilized interventions finally impact the soaring EUR whose relentless rise is crushing European corporate revenue and profit lines. For now, the EUR does not appear too concerned.
via Zero Hedge http://ift.tt/1clqm6L Tyler Durden
Nearly two months ago, when we commented on the recent string of unprecedented failures by the ECB to sterilize its legacy bond buying operation, the SMP, we commented that “judging by the feverish pace of purchases of every peripheral bond available, is this merely just another indication how little the ECB cares about sterilization, and is just a hint at an upcoming full-blown and unsterilized bond monetization about to be launched by Mario Draghi?” Sure enough at the subsequent February 6 ECB meeting Mario Draghi hinted as much when he said that among the things the ECB was looking at was precisely the “de”sterilizing of the SMP program. However, one stumbling block was getting the Bundebsbank’s tacit approval to proceed with this plan which would make the ECB’s bond monetization mirror that of the Fed where bonds are purchased on an unsterilized basis. And, as expected, overnight the Bundesbank threw in the towel on sterilization, meaning that the SMP will no longer be sterilized with an announcement divulging just this likely as soon as the next ECB meeting.
From the WSJ:
Germany’s central bank said Monday it would support suspending the European Central Bank’s nearly four-year-old policy of draining funds from euro-zone banks to offset the ECB’s government-bond holdings, saying the shift would stabilize money markets and cement the bank’s pledge to maintain an ultra-loose monetary policy. The Bundesbank’s stance, contained it its monthly report, would likely give the ECB cover in Germany if it decides to take this course. The weekly funding drains, known as sterilizations, helped to shield the ECB from criticism that it printed fresh money to bail out struggling countries such as Greece and Italy.
This concern is particularly pronounced in Germany, where purchases of government debt stir deep-rooted fears of inflation and a loss of central bank independence. The Bundesbank opposed both of the ECB’s bond-purchase plans in 2010 and 2012. By ending the weekly funding drains, the ECB would potentially leave an extra €175 billion ($239.6 billion) in the banking system, which in turn may reduce the rates banks charge each other for short-term cash.
The Bundesbank said in its monthly report that it “is open-minded about a possible adjustment of the current liquidity absorbing operations when it is appropriate to stabilize the money market and liquidity conditions.”
Such a move, it said, would “signal the accommodative monetary policy stance of the Eurosystem even clearer than before.” The Eurosystem refers to the ECB and 18 national central banks in the euro zone. The ECB has pledged to keep interest rates at their present record lows, or reduce them further, for an extended period
One implication, of course, is on European money-market rates which have been volatile in recent months and the result would be at least some short-term anchoring.
Analysts said that while suspending the weekly drains would have a short-term effect in anchoring money-market rates, it may not prove long-lasting. Because banks can also borrow unlimited amounts of money from the ECB, they may simply keep the extra funds and borrow less from the central bank, leaving the money supply largely stable.
A bigger question is whether now that sterilization is effectively history, will this open the gates for full-blown QE which the market has been largely anticipating for months, roughly since November when we penned “Next From The ECB: Here Comes QE, According To BNP” and which argued that in order to deal with Europe’s record low loan creation the ECB would have no choice but to step in and do just what the Fed has been doing to battle the same scourge: monetize assets outright in hopes of offsetting the monetary pipeline blocks that have haunted Europe for the past 5 years. Of course, that will not work and will merely send European stocks to recorder highs, even if the recent surge in Europe has been largely driven by the market pricing in of just this outcome. Another question is when will ECB unsterilized interventions finally impact the soaring EUR whose relentless rise is crushing European corporate revenue and profit lines. For now, the EUR does not appear too concerned.
via Zero Hedge http://ift.tt/1clqm6L Tyler Durden