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As reported earlier today, Paris was the latest city to succumb to a rogue shooter when a gunman shot a photographer at left-leaning French newspaper Liberation, following by a shooting near the headquarters of French bank SocGen.

The lone gunman is shown on the picture below.

How the Paris situation differs from numerous such incidents taking place recently in the US, however, is that so far the gunman has not been captured or otherwise “incapacitated.” And as the WSJ reports, Paris in now gripped in a manhunt for the gunman who is currently on the loose.

From the WSJ:

A manhunt was under way in central Paris Monday for a lone gunman who police suspect of two separate shootings and a brief hostage taking, in a series of events that Paris prosecutors are treating as a terrorist case, a spokeswoman said.

 

It was unclear what motivated the attacks—which sparked confusion across the French Capital—or what the possible thread was linking them, police said. The spokeswoman for the Paris prosecutor’s office didn’t provide any additional details. Paris Prosecutor François Molins is scheduled to hold a news conference later Monday.

 

In the first incident, a man opened fire Monday morning at the Paris headquarters of left-leaning newspaper Libération, leaving a 27-year old assistant photographer badly wounded. Shortly afterward, a gunman appeared outside the headquarters of French bank Société Générale SA in the business district of La Defense, a bank spokeswoman said. The man fired shots but there were no injuries or casualties at the bank.

 

The assailant then fled the business district, taking one man hostage and forcing him to drive to the Champs Élysées in central Paris before liberating him, a police officer said. A police helicopter was circling the famous Paris thoroughfare as officials seek to identify and capture the man.

 

Police are acting on the hypothesis that the same man is behind all events, police officials said. The police officer said the same bullets were used in both incidents on Monday morning. Witnesses said in both cases the shooter was wearing a dark coat, police said.

 

Many businesses in the areas where the man was sighted were tightening security.

That said, the most important component of the New Normal, confidence, has been preserved:

 Laurent Nunez, chief of staff for the Paris police head, said officials had no insights on the gunman’s motivations. He said police were conducting checks across Paris to try to capture him, including in the metro, the extensive underground transportation system that blankets the city.

 

“Very honestly, nobody has alerted to any sense of panic in the city,” said Mr. Nunez.

 

A spokeswoman for the RATP, which operates the metro, said traffic was moving normally. She said the company had not received any instructions from police to tighten security.

And some more confirmation that no matter what, Paris just refuses to panic:

A gunman next appeared in front of Société Générale’s skyscraper headquarters, located in western Paris.

 

“The man looked very calm and determined,” said Pierre-Albert Garcias, a community manager at the bank who witnessed the shooting. Mr. Garcias told French television all people present in the hallway immediately took shelter, fearing that the shooter would take aim at them, but that there were no scenes of widespread panic.

Truly admirable. Who would have though that none other than the Hitchhiker’s Guide to the Galaxy would become the normative directive of the New Normal.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/E2jUELn8TbM/story01.htm Tyler Durden

Today’s AM fix was USD 1,283.50, EUR 950.04 and GBP 797.01 per ounce.
Friday’s AM fix was USD 1,281.75, EUR 953.99 and GBP 797.65 per ounce.

Gold rose $0.10 or 0.01% Friday, closing at $1,287.80/oz. Silver slipped $0.06 or 0.29% closing at $20.75. Gold rose 0.03% while silver fell 3.26% for the week. Platinum fell $5.50 or 0.4% to $1,437.74/oz, while palladium dropped $6.50 or 0.9% to $729.72/oz.

Gold prices pulled back this morning as traders booked gains and stagnant physical demand had the yellow metal out of favour. Recent confirmation by Janet Yellen that she will continue Bernanke’s loose monetary policy lifted gold, but tapering appears priced into the metal already.

The McKinsey Global Institute recently reported on the effects of Quantitative Easing or QE on the UK economy or to be more precise the net transfer of £110 billion from UK households to the UK government. This is a wealth transfer game being played out across the world and the report from McKinsey shows that the hardest hit are elderly households on fixed income forms of savings.

Estimated Cumulative Change in Net Interest Income, 2007-12 ©McKinsey & Company

The Mckinsey chart above clearly shows that QE has been kind to governments and since the financial crisis began in 2007, those UK households that have increased their levels of savings have been severely penalised to the tune of £110 billion. This £110 billion is in effect removed from the UK high street and further deprives the UK economy of much needed consumer spending. At the same time the UK government has saved itself £120 billion of net interest payments.

The chart also shows the Eurozone and the U.S. are engaging in similar debt transfers from households to government. Those citizens that were prudent and wise are being unjustly penalised for their ability and desire to save.

The UK Prime Minister, David Cameron, has every reason to be worried as Paul Sykes has indicated that he will fund Nigel Farage’s UKIP to the tune of millions to do “whatever it takes” to help UKIP top the EU polls in May 2014.

Sykes, one of Britain’s wealthiest businessmen, was a keen supporter of the Tories under Margaret Thatcher but is determined to pull the UK out of the EU. Sykes and the UKIP party could not have asked for a powerful or more potent argument than the silent transfer of wealth from hard pressed UK households to their government.

As it stands the UKIP party currently has 13 seats in the European Parliament and estimates vary but it is believed that the UKIP would need to secure about 27 per cent in the elections in May to overtake the Tories as the largest UK party in the European Parliament.

It would be foolish to second guess what will happen in the UK EU elections come May 2014 but it appears that those households that save by placing cash on deposit will continue to lose out as the UK, the Eurozone and the U.S show no signs of easing their respective QE programmes.

The case for financial insurance or diversification into gold and silver is being reinforced by the actions of the UK, Eurozone and U.S governments.

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/DMoG9Q9E6BU/story01.htm GoldCore

China’s GDP is about to undergo the same magic that US GDP received earlier in the year. The “Chinese system of National Accounts” will see five significant adjustments that are expected to (surprise) boost the size of the nation’s estimate of its GDP. The National Bureau of Statistics is considering making the changes to reflect the latest economic and social developments and implement the reform guidelines unveiled at the 3rd Plenum recently. From the addition of research and development – intellectual properrty – (just as the US did) to including mark-to-market changes (read rises) in employee stock options and real estate in consumption data, the Chinese appear dead set on making a once-unbelievably goal-seeked number into an entirely fantastical representation of reality (which of course enables moar higher manipulation as to avoid any debt-to-gdp hurdles that the real world might see as a concern).

 

Via Xinhua,

The nation plans to give GDP readings and the revised historical figures of this indicator under new calculation method after the end of this year…

the U.S. revised its GDP data, the most important amendments is to research and development expenditures as well as entertainment, literary and artistic originals such as fixed capital formation expenditure included in GDP. This great repercussions in the international arena, in China also attracted relatively widespread concern, there has been speculation heated debate whether China’s national accounting system to do the appropriate amendments?

New accounting system will likely increase in total GDP:

The plan includes 5 key sections that change how the nation’s balance sheet and income (consumption) is calculated…

1. the introduction of the concept of intellectual property products, research and development expenditures will be included in GDP

 

2. the introduction of “economic ownership” concept, so that more reflect the actual accounting results

 

3. the rapid development of the real estate market, housing prices and rents are rising

 

4. land contract management rights transfer income to become an important part of farmers’ income

 

5. the employee stock options included workers compensation

Which leaves 3 critical aspects of make-believe for Chinese GDP statistsics:

1. Research and development expenditure will be included in GDP – based on best guesses, historical and current R&D will be “priced” into GDP data leaving plenty of scope for a goal-seeked guess at what the number needs to be.

 

2. Accounting of actual final consumption – this means that government-provided services – that improve people’s living standards – will be ‘valued’ and added to consumption data. This includes education, health, social security and other spending data. Furthermore, the mark-to-market gains from employee stock options will be included in final consumption data (so even more need to keep that stock market high for the PBOC)…

 

3. Gains (losses) from housing – the GDP data will include some adjustment based on the mark-to-market of home prices as a consumption-based positive. In other words, as the bubble grows, the rise in house/real estate prices will be included in GDP consumption calculations

 

In other words, China will be adding to its base GDP data all the bubble-driven aspects of the economy as the bubble continues to grow… one can only imagine what that will do to a) volatility, and b) the downswing when these ‘adjustments’ are forced the ‘wrong’ way…

On the bright side, this plan is not expected to be fully implemented until 2015 – and who knows what this will all look like by then…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3Q_yt0Ahgu8/story01.htm Tyler Durden

China’s GDP is about to undergo the same magic that US GDP received earlier in the year. The “Chinese system of National Accounts” will see five significant adjustments that are expected to (surprise) boost the size of the nation’s estimate of its GDP. The National Bureau of Statistics is considering making the changes to reflect the latest economic and social developments and implement the reform guidelines unveiled at the 3rd Plenum recently. From the addition of research and development – intellectual properrty – (just as the US did) to including mark-to-market changes (read rises) in employee stock options and real estate in consumption data, the Chinese appear dead set on making a once-unbelievably goal-seeked number into an entirely fantastical representation of reality (which of course enables moar higher manipulation as to avoid any debt-to-gdp hurdles that the real world might see as a concern).

 

Via Xinhua,

The nation plans to give GDP readings and the revised historical figures of this indicator under new calculation method after the end of this year…

the U.S. revised its GDP data, the most important amendments is to research and development expenditures as well as entertainment, literary and artistic originals such as fixed capital formation expenditure included in GDP. This great repercussions in the international arena, in China also attracted relatively widespread concern, there has been speculation heated debate whether China’s national accounting system to do the appropriate amendments?

New accounting system will likely increase in total GDP:

The plan includes 5 key sections that change how the nation’s balance sheet and income (consumption) is calculated…

1. the introduction of the concept of intellectual property products, research and development expenditures will be included in GDP

 

2. the introduction of “economic ownership” concept, so that more reflect the actual accounting results

 

3. the rapid development of the real estate market, housing prices and rents are rising

 

4. land contract management rights transfer income to become an important part of farmers’ income

 

5. the employee stock options included workers compensation

Which leaves 3 critical aspects of make-believe for Chinese GDP statistsics:

1. Research and development expenditure will be included in GDP – based on best guesses, historical and current R&D will be “priced” into GDP data leaving plenty of scope for a goal-seeked guess at what the number needs to be.

 

2. Accounting of actual final consumption – this means that government-provided services – that improve people’s living standards – will be ‘valued’ and added to consumption data. This includes education, health, social security and other spending data. Furthermore, the mark-to-market gains from employee stock options will be included in final consumption data (so even more need to keep that stock market high for the PBOC)…

 

3. Gains (losses) from housing – the GDP data will include some adjustment based on the mark-to-market of home prices as a consumption-based positive. In other words, as the bubble grows, the rise in house/real estate prices will be included in GDP consumption calculations

 

In other words, China will be adding to its base GDP data all the bubble-driven aspects of the economy as the bubble continues to grow… one can only imagine what that will do to a) volatility, and b) the downswing when these ‘adjustments’ are forced the ‘wrong’ way…

On the bright side, this plan is not expected to be fully implemented until 2015 – and who knows what this will all look like by then…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3Q_yt0Ahgu8/story01.htm Tyler Durden

The stock below is up 1200% year-to-date. The company in question is insolvent by any and all measures and has a "parent" under great pressure to take whatever gains it can get (as opposed to leave anything for shareholders). The company is exposed to the worst of the worst in the housing market. The smart money (as they are called) is piling in. The company is, of course, Fannie Mae (or Freddie Mac – same discussion). This chart, like none other, reflects the "investment" thesis in America today, as Grenwood's Walter Todd notes, “Either you’re going to make a lot of money or you’re going to lose everything you put into it."

 

 

However, as he adds, "I cannot fathom the government allowing someone to profit from these two entities given everything that’s happened, and the pain endured by the government and the taxpayer.”

The consensus in Washington among Democrats and Republicans is that Fannie Mae and Freddie Mac should be dismantled and shareholders wiped out. The Obama administration believes the two should be wound down, the Treasury Department said in a statement.

 

But why not gamble on the likelihood that against all odds, you can become instantly rich…

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/VCzD0ZxKeDg/story01.htm Tyler Durden

While the domestic euphoria in the stock market bubble has succeeded to sucker in everyone into the biggest multiple expansion rally in 15 years (as was noted earlier today, 75% of the S&P’s YTD return has come from its trailing PE expanding to 16.5x now from 13.7x in 2012 – the largest increase since 1998), foreigners continue to vote with their feet. In fact, as today’s August TIC data report showed, in August – perhaps due to Tapering fears – foreigners sold $16.9 billion in US equities. This was the fourth largest equity outflow in history. Transactions in other securities were mixed, with $10.8 billion in long-term Treasury sales offset by $16.8 billion in MBS/agency purchases, as well as $2.3 bilion in Corporate Bond buys.

 

How does this chart look on a trailing 12 month basis? Not good – the 12 month rolling average of net foreign purchases of Long-Term US securities dropped to just $17 billion from $25 billion last month. This is also the lowest average print since the 2009 recession.

Source: TIC

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/i3gMuGBd42A/story01.htm Tyler Durden

NAHB sentiment dropped to its lowest since June (after hitting 8-year highs just 3 months ago). This is the 3rd miss in a row as a huge rebound in prospective buyer traffic (read hope) in the NorthEast seemed to save the data from a fate worse than death. The prior print was revised down from 57 to 54 as it appears for the 3rd time in 20 years, the exuberance in realtor confidence is shown to be a false flag…

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/lHkMkk_SDgc/story01.htm Tyler Durden

European officials found a compromise between those wanting to allow the ESM to recapitalize banks directly, until the bank financed resolution funds has adequate resources, and those that who were opposed.  German opposition was most vocal and the compromise was to allow the German parliament veto power over any direct aid from the ESM.

Others may find comfort in the Bundesbank’s monthly report that appeared to endorse the ECB’s accommodative stance, despite reports suggesting that BBK President Weidmann and Asmussen, the German representative on the ECB’s Executive Board, opposed the recent rate cut. 

Yet, below the surface, there appears to have been a shift in the balance of power between the creditors and debtors in the euro area.   First, the EC and ECB joined forces to defeat the German push to exempt the landesbanks from the ECB’s regulatory authority. 

Germany can argue that the landesbanks are not systemically important, but this is to give too much credence to the superficial populist coverage as opposed to more rigorous analysis.  Much ink has been spilled on too-big-to-fail, while there is much to be concerned about, the fact of the matter is that in the euro-area, the substantial threats emanated not from the TBTF, but from the smaller, arguably, less supervised banks, such as Allied Irish in Ireland, the cajas in Spain and Laiki in Cyprus.  German regional banks have received among the largest bailouts in the euro area.

Second, as noted, the ECB cut rates over Germany representative objections.  Compounding the injury with insult, the French representative on the ECB’s Executive Board has been touting the possibility of outright bond purchases by the central bank.  Recall that in objection to the ECB’s bond purchases under then-President Trichet, two German (Weber and Stark) resigned.  Weidmann has objected to Draghi’s Outright Market Transaction (OMT) scheme, which while not deployed, has helped bolster sentiment and help diminish the existential nature of the euro area crisis.  We do recognize that OMT was conditional on a program with the Troika and was not as subjective as Trichet’s SMP effort.

Third, the EC announced it would initiate a formal review of the German current account surplus, which is above monitoring levels.   This seems to have irked the German establishment more than the rate cut, which Asmussen assured that the real issue was only about the timing.

The EC review follows on the heels of similar misgivings from the IMF and the US Treasury report on the foreign exchange market last month.  One of the perennial German fears, that of being isolated, has been borne out.  For its part, German officials see the current account surplus as evidence of its economic prowess and competitiveness.  

Others see the German surplus as a symptom of its compression of domestic demand, though miserly wage increases, reluctance to boost public infrastructure investment, and the failure to liberalize services.     Essentially, this view sees Germany as unwilling to offset the austerity in the periphery by pursuing more stimulative policies at home. 

This pressure on Germany reflects a shift in the balance of power in Europe.  Although France’s Hollande is terribly unpopular at home, Brussels and the ECB seem to be taking up his charge in trying to get Germany to pursue policies that benefit EMU as a whole.  Separately, note that France will be selling bonds this week for the first time since last month’s S&P downgrade (to AA) on Nov 8.

France had wanted the ESM to be available to direct recapitalization of European banks if needed, especially following the ECB’s asset quality review and stress tests.  Several of the other creditor nations were reluctant, wanting national backstops, if banks could not raise capital through retained earnings and capital markets.  If those national authorities could not act as the backstop (again not too big to fail, but too big for national officials aid), then it would have to accept conditionality associated with a memorandum of understanding with the Troika. 

An agreement before the end of the year was seen as important in order to give the European parliament sufficient time to approve it before dissolving ahead of next May’s election.    The resolution mechanism needs to be in place prior to the results of the asset quality review.  With it, the risk is that the reports trigger a new crisis of confidence.  Even though the German ability to negotiate appears hamstrung by the lack of a government (CDU and SPD a moving toward a grand coalition government but it is not yet in place).  While the ESM will be able to lend directly to the banks, German parliament has retained the veto. 

This may look like a German victory, but it may not really be one. Consider a situation where Country X is in a crisis, and several of its banks no longer have access to the capital market.  The amount of funds it needs outstrip the sovereign’s ability to deliver, with risking its fiscal objectives.  Many of the periphery countries want to go to the ESM.   Would the German parliament really prevent this and risk a widespread crisis in Europe?

With the UK re-thinking if it wants to be in the EU any more and the US pivoting toward Asia, Germany can be the unchallenged hegemon in Europe.   However, it is finding it increasingly difficult.  We had anticipated that it would seek to exert its influence through European institutions.  Weber’s resignation prevented Germany from taking the helm of the ECB.  In the more democratic institutions, it has been frustrated by the fact that a majority are debtors.   

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/zmNLavfvvq8/story01.htm Marc To Market