Venezuela’s Socialist Leader Maduro Doing His Best Obama Impersonation

Because apparently all great socialist thinkers went to the same school:

  • VENEZUELA SHOULD OBTAIN MORE TAXES FROM WEALTHY, MADURO SAYS
  • MADURO SAYS HE PROPOSES FISCAL ‘REVOLUTION’

And: “I will call on the people to launch an economic offensive superior to the one in November and December”… “Economic actions to focus on production, supply and fair prices


Because it appears that “fairly” sharing teleprompters is also part of the great socialist mandate.




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This Is One Condition Under Which The US Treasury Permits Korea To Manipulate Its Currency

From the just released “Semiannual Report on International Economic and Exchange Rate Policies”

Korea’s current account surplus further increased to 6.1 percent of GDP in 2013 – the highest  since 1999 – compared to 4.2 percent in 2012. Korea is one of only a few surplus economies with a significantly larger external surplus now than before the crisis. Net exports accounted for over half of Korea’s growth in 2013, highlighting the economy’s continued dependence on external demand and the weakness of domestic demand. Although Korea does not publish data on its foreign exchange intervention, during the second half of 2013 the Korean authorities are believed to have intervened to limit the pace of won appreciation. Korea’s foreign exchange reserves rose from $315.6 billion at end-June 2013 to $335.6 billion at end-December and $341.0 billion at the end of February 2014. The Korean authorities also increased their net forward position by $4.9 billion to $50.5 billion over the second half of 2013. The magnitude of these changes is larger than can be reasonably expected from simple interest earnings on the existing stock of reserve assets or valuation changes. The Korean authorities should limit foreign exchange intervention to the exceptional circumstances of disorderly market conditions and increase the transparency of their interventions in foreign exchange.

On behalf of South Korea we would like to thank the US Treasury, whose debt issuance the Fed has montized for the past five years and kept the USD low – this permission is very generous of you.




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Testy Tuesday – Tax Day Edition

Testy Tuesday – Tax Day Edition

By Phil Davis of Phil’s Stock World 

Time to pay your taxes.

But, fortunately, it’s still not time to pay the piper for all that money we’re borrowing to goose the economy. Well, goose may be too strong a term as 5 years and $5 Trillion Dollars into this mess, we’re really only flatlined the GDP to where it was back in 2007. 

 

Did you get your $5,000,000,000,000 worth? We know the top 0.01% sure did. We’ve made the World’s Billionaires alone $1.4Tn richer than they were in 2009 – and it only cost 140M working Americans $37,714 each! That’s how much $5Tn in additional debt has cost us – on top of the $2.5Tn we piled on fighting Iraq or Afghanistan for whatever reason it was we had to invade those guys. 

 

Billionaires

 

Don’t worry, it’s all fair, each one of those Billionaires also owes the same $37,714 as you do – they feel your pain! Multiply that by 3.5 and that’s your share of the National Debt, which is still growing by $500Bn a year, although that’s 1/2 of how fast it was growing under Bush II. And, of course, we’re not even counting the Fed’s $4Tn of additional debt – because we still get to pretend that will all work itself out in the end.  

Just like CHINA!! China’s Central Bank has been trying to drain a little liquidity out of the system and it looks like that’s already dropped GDP growth for the quarter down to 1.5%, nowhere near the 7.5% annual levels the Government was hoping for. That led Chinese stocks to fall about 1.5% this morning, led down by Financial and Commodity stocks.That’s the reaction to M2 (money supply) GROWING by 12.1% instead of the 13.3% it was growing a month earlier and despite $169Bn in loan growth.

 

FXI WEEKLY

[Chart by Dave Fry]

 

“Investors are a bit worried because M2 is quite low,” Zhang Haidong, an analyst at Tebon Securities Co., said by phone in Shanghai. “New loans may be better than expected by a little, but it’s still not considered good data; we still think liquidity is very tight.”

At the same time as liquidity is drying up and the economy is slowing, a massive housing glut is pushing Chinese real estate pricing to the brink of collapse. If real estate prices collapse, the Chinese banks that have Trillions in loans out on all these empty buildings are in DEEP TROUBLE. Already, construction companies are being paid with unsold apartments – signs of a top if ever there was one! Check out this picture – all the buildings on the right are unfinished in Yingkou:

 

 

Data in some of these smaller cities is scarce. But in 100 cities tracked by Nomura Holdings, 42% of those classified as Tier 3 and Tier 4 saw housing prices decline in March from February. Home construction in such cities is racing well ahead of population growth, says Beijing research firm Gavekal Dragonomics, as developers continue to build new projects without buyers.

 

 

The overall value of Chinese housing sold in the first two months of 2014 declined 5% from a year earlier, government statistics show. Private-sector data indicate the decline continued in March. The construction, sale and outfitting of apartments accounted for 23% of China’s gross domestic product in 2013, that is up steeply from 10% in 2006 and is higher than American housing’s share of GDP reached during the height of the U.S. housing boom in 2006, Moody’s says.

The finances of some cities and developers are being affected. China’s local governments depend on land sales to developers for about 40% of their revenue. Now those sales are bringing in less cash. After the city of Fenghua in eastern China cut the price of land, developer Zhejiang Xingrun Real Estate Co.—which had incurred higher land costs—found it tough to sell apartments and make payments on its debt, which the city website put at nearly $600 million. Municipal officials say they are trying to stave off a bankruptcy by the developer that could tarnish the city’s reputation. 

Further weakness could mean trouble for construction companies and appliance and commodity producers. Furniture and appliance sales in China have been slowing along with the weaker pace of apartment sales. Also potentially affected are businesses that use real estate as collateral to get new loans; China’s banks rely on property holdings as the main collateral securing loans.

 

China PPI

 

We remain “Cashy and Cautious” as it’s hard to imagine a China melt-down being ignored by the rest of the World. With all the economic meddling by the Central Banksters, anything is possible but there’s plenty of ways to make good money with our sidelined cash. Yesterday, for example, I noted we were shorting Oil Futures (/CL) at $104 in our morning post. 

 

 

As you can see from the chart, we got a dip to $103.50 (up $500 per contract) mid-day, followed by another entry opportunity in the afternoon and then an easy ride back down to $103 – for another $1,000 per contract gain. We also have USO and SCO option plays, of course, from our Member Chat Room – as longer-term bets that oil won’t hold $100. 

 

 

What we care about today is whether the indexes hold our bounce lines (see yesterday’s post for full explanation) and we predicted the weak bounce lines for the day would be Dow 16,120, S&P 1,832, Nasdaq 4,075, NYSE 10,350 and Russell 1,125 and, what we actually got was: Dow 16,173, S&P 1,831, Nasdaq 4,023, NYSE 10,359 and Russell 1,115. On the whole, not a fantastic showing.  

We’ll be watching the S&P and NYSE very closely, as they are both right on their lines while the Russell and the Nasdaq, our usual leaders, still have a lot of work to do.  

Keep in mind that we talk about China, Japan, the EU, the Ukraine, Income Disparity, Money Supply, Deficits, etc. to keep the MACRO picture in focus – it’s not stuff that’s immediately actionable – just the undercurrent the short-term market has to swim against.  We strive to be patient investors and use those long-term developments to help us plant our trees for future growth – it also helps to keep us from being surprised when “suddenly” something blows up in the short-term. 




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Over 40% Of The S&P 500 Is In Correction Mode

The S&P 500 is down around 4% from its highs (outperforming the high-beta hangovers of Nasdaq and Russell 2000 that were down almost 10% from their highs at today’s lows). But under the surface, the S&P is ugly with the 500 index members down 10.5% on average. 213 members of the S&P 500 are down over 10% (in correction mode). Only 72 member of the 500-stock index are ‘beating’ the index… this is not just a small-cap growth-hype selloff… it’s spreading…

 




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Soaring Food Inflation Full Frontal: Beef And Shrimp Prices Explode

We previously noted that beef prices have been reaching new all time highs on an almost daily basis. It is time to update the chart. Below we show what a world in which the Fed is constantly lamenting the lack of inflation looks like for beef prices…

 

… and for shrimp.

More from Bloomberg:

Prices for shrimp have jumped to a 14-year high in recent months, spurred by a disease that’s ravaging the crustacean’s population. At Noodles & Co., a chain with locations across the country, it costs 29 percent more to add the shellfish to pastas this year, and shrimp-heavy dishes at places like the Cheesecake Factory Inc. are going up as well.

 

Restaurant chains, already struggling with shaky U.S. consumer confidence, are taking a profit hit as prices climb. Even worse, the surge is happening during the season of Lent, when eateries rely on seafood to lure Christian diners who abstain from chicken, beef and pork on certain days.

 

“It’s coming at a tough time for the industry,” said Andrew Barish, a San Francisco-based analyst at Jefferies LLC. “With the Lenten season, what you’ll see out there is a lot of promotions with seafood, and usually shrimp is a big part of that.”

 

In March, shrimp prices jumped 61 percent from a year earlier, according to the U.S. Bureau of Labor Statistics. The climb is mainly due to a bacterial disease known as early mortality syndrome. While the ailment has no effect on humans, it’s wreaking havoc on young shrimp farmed in Southeast Asia, shrinking supplies.

 

***

 

James Johnson, a Jewel-Osco supermarket shopper in Chicago, has noticed the price increase. He’s been cutting back on one of his favorite dishes — shrimp and potato soup — because of the cost.

 

“I haven’t made it in a while,” the 29-year-old said. “Shrimp looks expensive.”

 

***

At Noodles, it now costs $3.34 to add the shellfish to a meal of pasta or pad thai, compared with $2.59 last year.

 

“We still want to at least offer it as choice,” Chief Executive Officer Kevin Reddy said in a phone interview. “As soon as the costs begin to normalize, we’ll return to the regular price.”

Ah yes, because retailers are always so willing to lower costs…

So for all those whose sustenance includes iPads and LCD TVs, or heaven forbid the pink slime known as fast food – you are in luck: the BLS’ hedonic adjustments mean the rate of price increase in your daily consumption has rarely been lower. For everyone else: our condolences.




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Prince Bandar bin Sultan, Head Of Saudi Intelligence, Has Been Sacked

In the aftermath of the disastrous, for both the US and Saudi Arabia, false flag campaign to replace the Syrian regime with one which would be amenable to allowing a Qatari gas pipeline to pass underneath the Al-Qaeda rebel infested country, there were numerous rumors that the reign of Saudi’s infamous former ambassador to the US and current intelligence chief, Prince Bandar “Bush” bin Sultan – the man who we suggested was the puppetmaster behind the entire failed operation – had come to an end. Some two months ago, Shia Post reported that “News sources announced that the chief of the Saudi spying apparatus Bandar bin Sultan has been dismissed… Since creation of crisis in Syria by Saudi Arabia, Qatar and Turkey, Bandar bin Sultan’s name has been heard time and again in tandem with the Syrian crisis.”

Moments ago, in a tersely worded statement from the Saudi Press Agency, it was indeed confirmed that, perhaps in response to his failed handling of the Syrian conflict, Prince Bandar has indeed been sacked.

A royal order announced here today that Prince Bandar bin Sultan bin Abdulaziz was relieved of his post as Chief of General Intelligence upon his request and that General Staff Yousif bin Ali Al-Idreesi was assigned to act as Chief of General Intelligence. The royal order will be carried out by the concerned authorities with immediate effect.

Hardly surprising, here is the explanation why the person who was once one of America’s most bosom allies in the Middle East, just got the boot:

Bandar bin Sultan is one of the main mindsets and players of regional insecurity especially in Syria, Iraq and Lebanon. His supports for terrorist groups acting in Syria are not hidden to anybody. This Saudi prince has very close relations with the armed terrorists in Syria. Recently he had lashed out at the Al-Saud family over its way of backing terrorists. These criticisms have annoyed Saudi monarch Abdullah.

 

Nevertheless, perhaps one of the reasons for firing Bandar bin Sultan was the issue raised by some Saudi authorities as Riyadh’s “failure of foreign policy” regarding the Syrian crisis. Some of the political pundits have said that Sultan’s performance of the recent months have even worried Washington. Now, it is expected that with the designation of Mohammad bin Nayef bin Abdul Aziz as the new chief of the Saudi security, the Washington-Riyadh ties will be normalized since this figure of the Saudi royal family is trusted by the US officials.

 

Apart from all surmises, Bandar bin Sultan is considered as one of the successors of the monarchial regime. Bandar has been regarded as a powerful figure in the war of power among the Saudi princes. It seems that his obstinacy in decision-making was another cause of King Abdullah’s fear of his power. This fear has reached the extent that the senile Saudi king has made up his mind to sack Bandar bin Sultan from the most important security apparatus of the country in a bid to alleviate part of the internal criticisms and promote Mohammad bin Nayef’s position. Furthermore, changes in the Saudi security apparatus will pave the way for maintaining the demands of the US regime; especially that, according to some news sources, Mohammad bin Nayef’s appointment has been done after the US officials’ order.

But don’t cry for the Prince – his net worth is estimated to be well in the billions.




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How the CEO of HFT Firm Virtu Financial is Demanding a Taxpayer Bailout in Florida

What the financial crisis, subsequent taxpayer bailouts, zero prosecutions of financial industry participants and further consolidation of the economy by oligarchs has taught us more than anything else is that the super rich and politically connected are not allowed to fail. Apparently, this may also apply to the head of one of the largest firms in what is quickly becoming the most despised “industry” in the nation.

By now, pretty much everyone in America knows about Michael Lewis’ book Flash Boys, which exposes the high frequency trading (HFT) industry for the money-sucking parasite it is. However, what will really get your blood boiling, particularly if you live in Florida, is how the CEO of one of the biggest players in the HFT space, Virtu Financial, is looking for taxpayers to bail-out his poorly performing investment in the Florida Panther NFL hockey franchise. This takes having “some nerve” to a whole new level of absurdity.

From Bloomberg:

Vincent Viola, whose high-frequency trading firm plans to raise millions of dollars in an initial public offering next month, is seeking tax dollars to help cover the bills for the Florida Panthers hockey team he bought six months ago.

Viola asked lawmakers in South Florida’s Broward County to use $64 million in taxpayer funds for arena bond payments owed by the team, which says it’s losing money as attendance has fallen to a 14-year low. Officials in Broward, which encompasses Fort Lauderdale on the Atlantic Coast, disagree on how to proceed, with some saying that if they don’t pick up the tab, the team may move and leave taxpayers with $225 million in debt and an empty arena.

Sounds a lot like the nonsense we all head that went something like “we must bail-out and not regulate banking criminals otherwise they will leave the U.S.” Oh the horror, these crooks might take their organized crime elsewhere…

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The Futures Of Countries: A Look At The Secession Movements Around The World

Submitted by Jeff Thomas via Doug Casey's International Man blog,

The world is abuzz over Crimea. 95% of the Crimean people recently voted to reconnect with Russia after a twenty-three-year hiatus. Although Crimea had been Russian for over 200 years, Western powers hollered "foul!" over the re-unification.

In addition to Western pundits commenting nightly that such an occurrence is an international disaster, the world seems to be taking up sides over the possibility that any other former Russian territory may also choose to re-unite with Russia, and sabres are already rattling all round.

We tend to forget that, although the world map has looked more or less the same since the end of World War II, it has been the norm, throughout history, for large parcels of property to change hands fairly often. Boundaries move. Countries become larger, smaller, or disappear altogether. Large empires are created, swallowing up smaller countries, sometimes lasting for 200 years or more, then inexorably breaking up into smaller remnants.

Certainly we are heading into a period of dramatic change—economic change, social change, and certainly political change. Whenever such a period occurs in history, changes in the lines on the map inevitably also occur. And, although no major changes have taken place recently, early rumblings can be heard all over the world.

Breaking Away

  • Venice

Venetians send €71 billion to Rome annually, yet only €50 billion returns in services and investment. As they have become "tired of supporting the poor and crime-ridden south," 89% of Venetians have recently voted to create their own sovereign state. Following the vote, Venetians declared independence from Italy. Already, this decision has sparked an interest in Sardinia to have a referendum. Discussions are afoot for Lombardy, Trentino, and Friuli-Venezia Giulia to possibly join them.

  • Scotland

Scotland was an independent country until the 1707 National Referendum, when it became a part of the UK. However, in September 2014, they will vote to decide whether they will leave the UK and become independent. The UK has, since the 1950s, taken a passive position in relinquishing its colonies, and the majority of them have gone independent since then. However, if a colony (now called a British Overseas Territory) wishes to remain a colony, the UK firmly defends that choice. This "let the people decide" stance is extremely admirable and may well be unique in the world.

  • Spain

Spain lost Gibraltar to the UK in 1704, and they want it back. Understandably, Gibraltarians have a great deal more faith in a tie to Britain than to Spain. The Spanish would also like to have Andorra once again. To add to the drama, Spain is having problems over Catalonia and the Basque provinces.

  • Falklands

Across the Atlantic, sabres are also being rattled in Argentina. President Cristina Fernández de Kirchner seeks to retake the Falkland Islands, despite a recent overwhelming (99%) vote by Falklanders to remain a part of Britain (and despite a decisive victory by the UK only 30 years ago over the same islands).

In much of the world, small countries are hoping to retain their independence, whilst portions of larger countries are trying to establish their independence. Understandably, they're meeting with resistance, as it's usually the areas that are the net-contributors to the larger economy that seek independence, whilst the areas that are the net-recipients wish to take the conglomerate approach (and to continue to eat their neighbour's lunch).

This is evident even in the US, where those states that are net-contributors are experiencing the same frustration as Venetians and are making noises about secession. Not surprisingly, net-recipient states have no desire to secede. The central government, of course, has a singular goal, and that is to continue to dominate them all. This particular conflict is in its earliest stages, and it will be some time before we see whether secession in the US gathers any real momentum.

A move to break away is invariably a bottom-up effort—created by the people. A move to create a conglomerate state tends to be top-down—created by the political class. Political leaders invariably have an insatiable appetite for gobbling up as much real estate as possible. In other ages, this was almost always achieved through warfare, but today, this is increasingly being attempted through treaties with other political leaders.

Joining Together

The US is most certainly the original model of this type of agreement, and since 1992, much of Europe joined together in a sort of "United States of Europe." This hasn't worked out too well at all, but that hasn't stopped political leaders elsewhere in the world from wanting to imitate the European leviathan.

Each of these groupings follows the EU model to a greater or lesser extent, and in each case, the "unification" is desired, not by the public, but by the political leaders.

In South America there are a myriad of organizations: Mercosur, Unasur, the Andean Community of Nations, ALBA, CELAC, and others. Each country, save poor Suriname, seems to have multiple memberships in the assorted organizations. If some of the associations seem contrived and even arbitrary, they are. All of them are attempts to maximise the level of power through association. Some of the relationships are acrimonious, as each nation strives to maximise its own importance.

To this, we can add the famed BRICS and ASEAN, also notably top-down alliances.

What we see here is the desire by political leaders to construct conglomerates that are as large as possible, whilst the general populations seek to create smaller, more manageable entities. Clearly, the smaller model provides the greatest potential for self-governance (as in the Cantons of Switzerland) and limitation of the size of government, together with a greater opportunity to create economic competition between states.

But, of course, this is the absolute antithesis of what provides power and control to the political class. So, what will the outcome be: the end of the nation state, as libertarians would hope, or something akin to George Orwell's Eurasia, Eastasia, and Oceania?

It may well be that neither will be fully realised.. Human nature being eternal, the world will always have the libertarians on one end of the spectrum and the dominators on the other. The struggle will be unending, and we shall continue to see empires and associations rise and fall, whilst smaller nations break away at intervals.

The real question is how we choose to deal with this eternal condition. Do we as individuals take comfort in being a part of a conglomerate, with its promise of full equality, security, and cradle-to-grave care, regardless of how insincere (and impossible) that promise might be, or do we choose the smaller, more independent state, with its goals of productivity, greater opportunity, and self-determination?

If the latter, we should examine such smaller states and those that are emerging. Some, like Hong Kong, Andorra, and the Cayman Islands, are well-established. Others, like Venice, bear watching, for they may provide the future of free-market self-determination.




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Ukraine Reality Ignored As Stocks Close At Highs On Hopes of More Japan Easing

Another day, another epic ramp. Any "investor" watching the last two days of totally manic market behavior must be open-mouthed at the total lack of fundamental sanity behind any of the moves. Even the mainstream media is stunned by the moves embarrased into mere commentary and afraid to opine on any reason. The reason for today's rip – an economic assessment downgrade for Japan which smahed USDJPY higher and through magic of carry, lifted US equities. There was no let-up in Ukraine, no data to confirm growth hype, no US news… but the Russell and Nasdaq managed a 2.5% bounce in a stright line after the Japan headline. Away from the idiocy in stocks, precious metals were rammed lower early on but leaked back higher all day. The USD pushed higher but FX was relatively quiet aside from the idiotic moves in JPY. Treasuries rallied at the long-end on the day (despite the surge in stocks). "unrigged"

 

These are your markets…

 

The Nasdaq bounced perfectly off its 200DMA and the Russell 2000 ended back above its 200DMA (after breaking it early in the day)

 

USDJPY was in charge… but the last hour stocks got ahead of themselves…

 

Credit markets were correlated with stocks as expected but nothing like as juiced by the JPY monentum…

 

Growth stocks are at 7-month lows versus value stocks…

 

VIX remained closely coupled with stocks as Nanex exposed the freakish nature of the options market ince again today…

 

Precious metals were monkey-hammered early on but limped back higher. Oil prices rose on Ukraine fears (but only modestly)

 

FX markets were relatively calm aside from the outargeous swings in JPY…

 

Treasuries rallied at the long-end with 30Y Yields back at 10-month lows…

 

Charts: Bloomberg

Bonus Chart: High-Yield Credit remains the arbiter of the cycle and it seems stocks want to catch down to that reality as the growth hype unravels




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Ukraine To Issue “Military” Bonds To “Increase Combat Readiness Of Armed Forces”

When it comes to funding itself, US guarantee or no US guarantee, troubled Ukraine which by most accounts is on the verge if not already embroiled in a civil war, appears unable to gain much traction. Some headlines from today confirming this:

  • UKRAINE FAILS TO SELL 3-MONTH USD NOTES AT AUCTION
  • UKRAINE FAILS TO SELL 9-MONTH UAH NOTES AT AUCTION: MINISTRY

So what is the desperate for cash nation to do? Why pull a page straight out of Uncle Sam’s war playbook: play to people’s patriotism and issue “military” bonds, of course.  Interfax reports that the Ukrainian Finance Ministry is to make issues of two-year government “military” bonds with worth 1.1 billion hryvni at an annual interest rate of 7%.

In other words, Uncle Sergey Want You To Buy Bonds!

According to government resolutions published on Tuesday, the first issue is non-documentary government bonds with a face value of 1 billion hryvni. The second one is documentary treasury bonds with a face value of 100 milion hryvni.

The yield on the bonds issued at a face value of 1,000 hryvni will be paid every six months. Unless, of course, Ukraine pulls a Movie Gallery and between its payments to Gazprom, and paying its military to avoid some unhappy soldiers, defaults before even the first payment is made.

More:

The National Savings Bank has been chosen to act as a general agent for allocating and servicing the circulation and redemption of the treasury bonds and will receive 0.5% from the par value of the sold securities. To maintain liquidity, it is allowed to buy back the treasury bonds at a price not below their par value.

 

Such a proposal is an appeal to the community to unite in their efforts, wishes and intention to join the process of resolving national problems and providing financial help to national armed forces in order to increase their combat readiness and boost the country’s defensive capabilities,” the Finance Ministry said in its earlier announcement of the “military” bonds.

The next question: will these bonds be subject to locate, and which repo desk will have them in inventory as soon as possible, so the less patriotic elements can short the Ukraine “military” effort against Russia?




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