Tag: finance

Following the hotter than expected PPI data, it was the turn of CPI to come in stronger than consensus had hoped for, and sure enough, moments ago the BLS reported that March consumer inflation printed higher than the expected 0.1%, coming at 0.2% for both headline and the core (excluding food and energy) components, driven mostly higher by a surge in Utility costs which soared by 7.5% M/M, and a whopping 16.4% Y/Y. Curiously, the energy services spike of 2.6% of which utilities is a part, was offset by a drop in energy commodities, mostly fuel oil, whose cost dropped 2.9% in March and by gasoline down 1.7%, and down 4.7% Y/Y.

The BLS also noted the rapid increase in the shelter price index: “Almost two-thirds of this increase was accounted for by the shelter index, which rose 0.3 percent. The indexes for rent and owners’ equivalent rent both rose 0.3 percent, while the index for lodging away from home rose 1.5 percent.” Is the housing bubble – both purchase and rent – and which has already burst across much of the nation, finally being noticed by the Fed?

The only other core commodity which saw a drop in prices in March were medical care commodities, which dropped by -.3%. Everything else was higher, and solidifies the Fed’s tapering bias, if not so much a confirmation that the economy is growing which as the concurrently printing Empire Fed, on a tumble in business conditions and new orders, showed is not happening. Perhaps one should be blaming the balmy spring weather in the Empire State for this particular miss.

The monthly CPI breakdown:

And the components:

And some more details from the report:

Food

 

The food index rose 0.4 percent in March, the same increase as in February. Four of the six major grocery store food groups increased in March, three of them sharply. The index for meats, poultry, fish, and eggs posted the largest increase, rising 1.2 percent, the same increase as in February. The index for dairy and related products rose 1.0 percent in March, its fifth consecutive increase. The index for fruits and vegetables, which rose 1.1 percent in February, rose 0.9 percent in March. The index for fresh fruits rose 3.1 percent, while the index for fresh vegetables declined 1.6 percent. The index for cereals and bakery products rose 0.2 percent in March, while the indexes for nonalcoholic beverages and for other food at home both declined. The food at home index has risen 1.4 percent over the last year, its largest 12-month increase since August 2012. The index for meats, poultry, fish, and eggs increased the most over the span, rising 5.1 percent, while the index for nonalcoholic beverages was the only one to decline, falling 1.8 percent. The index for food away from home rose 0.3 percent in March, the same increase as in February, and has increased 2.3 percent over the last 12 months.

 

Energy

 

The energy index fell 0.1 percent in March after a 0.5 percent decline in February. The gasoline index declined 1.7 percent in March, the same decline as in February. (Before seasonal adjustment, gasoline prices rose 5.1 percent in March). The fuel oil index also declined, falling 2.9 percent after rising 4.1 percent the previous month. In contrast, the index for natural gas rose sharply, increasing 7.5 percent, its largest one-month increase since October 2005. It has increased 15.3 percent over the last three months. The electricity index also increased, rising 1.1 percent. Over the last 12 months, the energy index has increased 0.4 percent, with the natural gas index rising 16.4 percent, the electricity index increasing 5.3 percent, and the fuel oil index advancing 2.1 percent. These increases more than offset a 4.7 percent decline in the gasoline index.

 

All items less food and energy

 

The index for all items less food and energy increased 0.2 percent in March. Almost two-thirds of this increase was accounted for by the shelter index, which rose 0.3 percent. The indexes for rent and owners’ equivalent rent both rose 0.3 percent, while the index for lodging away from home rose 1.5 percent. The medical care index rose 0.2 percent in March. Among medical care components, the hospital services index increased 0.8 percent, but the index for prescription drugs fell 0.2 percent. The apparel index, which fell 0.3 percent in February, increased 0.3 percent in March. The index for used cars and trucks rose 0.4 percent, while the index for airline fares advanced 0.5 percent. The indexes for alcoholic beverages, for tobacco, and for personal care also rose in March. The index for new vehicles was unchanged in March. The recreation index declined in March, falling 0.1 percent, as did the index for household furnishings and operations.

 

The index for all items less food and energy has risen 1.7 percent over the last 12 months. The shelter index has risen 2.7 percent over the last 12 months;  this is the largest 12-month increase since the period ending March 2008. Several components have increased only slightly over the last year, including   apparel (0.5 percent), recreation (0.3 percent), new vehicles (0.2 percent), and used cars and trucks (0.1 percent).

Don’t expect the shelter index, most of which is rent-driven and which now has an upward momentum of its own, to moderate any time soon.

via Zero Hedge http://ift.tt/1hR9mDm Tyler Durden

For the 8th month of the last 9, the Empire Manufacturing missed expectations. Tumbling to its lowest since December (despite the apparent let-up in the conventional scapegoat for every data miss in the past quarter: “harsh weather”), this is the biggest miss since Jan 2013. The average workweek slowed significantly, but the overall index was modestly saved by a push higher in ‘hope’ as the six-months-forward index jumped back to Feb highs. Perhaps most concerning, given the supposed pent-up demand that we have been told to expect when the weather picked up, was the tumble in new orders to their lowest since November.

 

 

From the report:

The April 2014 Empire State Manufacturing Survey indicates that business activity was flat for New York manufacturers. The headline general business conditions index slipped four points to 1.3. The new orders index fell below zero to -2.8, pointing to a slight decline in orders, and the shipments index was little changed at 3.2. The unfilled orders index remained negative at -13.3, and the inventories index dropped ten points to -3.1. The prices paid index held steady at 22.5, indicating continued moderate input price increases, and the prices received index rose to 10.2, pointing to a pickup in selling price increases. Employment indexes showed a modest rise in employment levels and a slight increase in the average workweek. Indexes for the six-month outlook continued to convey a good deal of optimism about future conditions, and the capital expenditures index climbed seven points to 23.5, its highest level in several months (ZH: LOL).

 

Business Activity Flat

 

Business activity was flat for New York manufacturers, according to the April 2014 survey. The general business conditions index slipped four points to 1.3, with 26 percent of respondents reporting that conditions had improved over the month and 24 percent reporting that conditions had worsened. The new orders index dipped into negative territory, falling six points to -2.8—a sign that orders were slightly lower over the month. The shipments index was little changed at 3.2, pointing to a small increase in shipments, and the unfilled orders index remained negative at -13.3. The delivery time index fell six points to -9.2, indicating that delivery times quickened. The inventories index fell ten points to -3.1, suggesting a slight decline in inventory levels

In other words: current conditions decline again, but everyone is hopeful about the future (unclear why – they have been hopeful for the past 5 years and… nothing yet), and of course, everyone is certain capex will pick up any minute now, as others – not them – begin spending.

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

Gold prices are down almost 2% this morning (over $25) as last night's slowdown in Chinese money-supply growth and fears that China's insatiable gold demand has become less insatiable send the barbarous relic back towards $1300. Slowing GDP expectations, increasing restrictions on shadow-banking commodity-backed financing, and a need for liquidity are all factors weighing on the precious metal this morning.

 

 

As WSJ reports,

China's appetite for gold is waning after a decadelong buying spree, suppressed by the country's economic slowdown and constrained credit markets.

 

Demand in the world's biggest gold consumer is likely to stay flat in 2014, according to estimates from the World Gold Council. Gold demand in China has expanded every year since 2002, when it declined, according to the industry group, whose forecasts are closely watched in the gold market.

 

…

Chinese consumption has helped to underpin gold prices since 2001, when many price and trading restrictions were relaxed. Last year saw frenzied buying as Chinese investors and jewelry buyers sought to capitalize on low prices. Chinese demand jumped 32% in 2013, vaulting the country past India to first place in the rankings of the world's gold consumers. But it is unlikely that record pace can be maintained, even if prices turn lower, according to the World Gold Council.

 

"We're looking at best for it to be on par with 2013," said Albert Cheng, managing director for the Far East at the World Gold Council. The council is releasing its latest report on China's gold market Tuesday.

 

Although the report doesn't offer a figure for estimated Chinese gold demand this year, it says 2014 will be a year of consolidation. "Chinese consumers brought forward jewelry and bar purchases, which may limit growth in demand in 2014," the report said.

 

…

 

"We're not seeing the kind of crazy buying we saw last year," said store manager Karone Huang. Last year, "we couldn't even fill our orders fast enough. That's how busy we were."

via Zero Hedge http://ift.tt/1t4AqZb Tyler Durden

Following last night’s protest in front of the Kiev parliament by Maidan faithful and others who had gotten sick and tired by their government doing absolutely nothing to preserve the cohesion of the Ukraine – both west and east – this morning acting president Turchynov, realizing he is between a rock and a hard place and suddenly his position is quite precarious, finally announced that he had issued an order to the country’s military to begin operations to retake government buildings seized by pro-Russia separatists in eastern areas.  Oleksandr Turchynov, also the parliament speaker, said the deployment had begun in the Donetsk region, where many of the approximately 10 towns affected by the protests are located.

FT reports:

“Overnight, an antiterrorist operation began in the north of Donetsk,” Mr Turchynov said in parliament, one day after his deadline for the demonstrators to surrender passed. “But it will be phased, responsible and balanced. The purpose of the actions, I stress once again, is to protect the citizens of Ukraine.”

 

Hours later Ihor Dyomin, a Donetsk region interior ministry spokesman, said that pro-Russia protesters who seized a police building in the town of Kramatorsk earlier this week had left voluntarily. It is not clear how many protesters there were or if they were armed.

 

Video posted on the internet on Tuesday morning showed pro-Russian activists blocking a Ukrainian army tank on the outskirts of Slavyansk, one of the cities and towns where law enforcement and regional government buildings had been seized by pro-Russian separatists.

 

Nela Stepa, mayor of the city where at the weekend separatists seized a regional law enforcement building, appeared on television saying that armed men dressed in camouflage “that don’t hide that they are from Crimea . . . from Russia” had also seized the city council building.

 

“I don’t know who or what this is,” she said in reference to a new mayor the grouping claims to have appointed for the city.

 

Kiev has also said it is open to dialogue with pro-Russia groups in the east, a move Sergei Lavrov, Russia’s foreign minister, said on Tuesday was “certainly a step in the right direction, albeit very belated”.

It remains to be seen if Russia’s response is also phased, responsible and balanced. For now, all signs point to no:

Dmitry Medvedev, Russia’s prime minister, was much more pessimistic, responding on his Facebook page to the deaths of two people in Slavyansk on Sunday.

 

“Blood has once again been spilled in Ukraine,” he wrote. “The country is anticipating civil war.”

To be sure, Ukraine is sticking to its narrative, most likely dictated to its by CIA director Brennan who as it was revealed “secretly” visited Kiev over the weekend, which is that it is all Russia’s fault for destabilizing the region:

Kiev’s SBU state security service said on Tuesday it had identified a Russian special forces officer, Ihor Stryelkov, as leader of a “diversion group which is terrorising the local population, seizing administrative buildings and destabilising the social-political situation in eastern regions of Ukraine”.

 

Pro-Russia separatists detained by the SBU in recent days “recognised” Mr Stryelkov’s voice, the SBU claimed, as the person “giving them instructions to seize administrative buildings in Kharkiv”, the largest city in eastern Ukraine.

 

Mr Stryelkov, according to the SBU, arrived in Crimea last month to co-ordinate “the activities of Russian military personnel and special forces there seizing Ukrainian armed services posts there and regional government”.

Still, the day following Putin’s explicit and latest warning to Obama that only he can now stop bloodshed in Ukraine, we can’t help but feel that the situation in east Ukraine is about to truly spiral out of control… which of course should send stocks soaring in this bizarro, centrally-planned world in which nothing makes sense any more.

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

• Ukraine forces move against separatists (FT)
• China GDP Gauge Seen Showing Deeper Slowdown (BBG)
• China Is Losing Its Taste for Gold (WSJ)
• Regulators Weigh Curbs on Trading Fees (WSJ)
• Obama, Putin Talk as Unrest Roils Eastern Ukraine (WSJ)
• Japan PM talks with BOJ chief, does not push for easing (Reuters)
• BRICS countries to set up their own IMF (RBTH)
• IMF Members Weigh Options to Sidestep U.S. Congress on Overhaul (WSJ)
• Zebra to Buy Motorola Solutions Unit for $3.45 Billion (BBG)
• Chinese Thunder God Herb Works as Well as Pain Therapy (BBG)
• Italian Premier Renzi Names State-Controlled Company Bosses (WSJ)
• China New Credit Declines as Money-Supply Growth Decelerates  (BBG)
• European Companies See Sales Growth Hit by Exchange Rates (WSJ)

 

Overnight Media Digest

WSJ

* Jeff Immelt may give up leadership of General Electric Co sooner than his expected 20-year tenure, as he and fellow directors re-evaluate the right term for its chief executive, people familiar with GE’s thinking said. (http://ift.tt/1l0tu9N)

* Citigroup Inc Chief Executive Michael Corbat vowed to find an “industrial-strength” solution to the regulatory problems dogging the bank. Speaking after Citigroup reported better-than-expected first-quarter earnings on Monday, Corbat faced more than a dozen questions from analysts on the bank’s recent failure to win regulatory approval to return capital to shareholders. (http://ift.tt/1gZ5yjl)

* Boeing Co said it has reached a partial agreement on details of a new deal with one of its largest suppliers, Spirit AeroSystems Holdings Inc, though after months of talks, the two sides have yet to finalize a long-term pact for key parts of its main commercial jet programs. The proposed agreement would replace a deal that ran out in 2013 and was then extended, covering parts such as fuselages produced for Boeing’s best-selling 737 plane. (http://ift.tt/1t4t5sv)

* Google Inc on Monday acquired a maker of solar-powered drones – a startup that Facebook Inc had also considered acquiring – as the technology giants battle to extend their influence and find new users in the far corners of the earth. Google didn’t disclose the purchase price for New Mexico-based Titan Aerospace, which is developing jet-sized drones that are intended to fly nonstop for years. (http://ift.tt/1t4t1ZZ)

* A fee system that is a major source of revenue for exchanges and some high-frequency trading firms is coming under the heightened scrutiny of regulators concerned that market prices are being distorted, according to top Securities and Exchange Commission officials. (http://ift.tt/1t4t5sy)

* Some of Twitter Inc’s biggest and earliest backers said they don’t intend to sell shares when rules barring them from doing so expire next month, a vote of confidence in the young public company, whose shares have tumbled in recent months. (http://ift.tt/1t4t5sz)

* In the first courtroom appearance by a Samsung executive during the high-stakes patent case against Apple Inc , former U.S. mobile division CEO Dale Sohn said the South Korean firm successfully changed its approach from marketing its products together with mobile carriers to promoting its own brand. Sohn said Samsung’s gains in the U.S. smartphone market are the result of a strategy shift begun in 2011, not because it “followed” Apple. (http://ift.tt/1t4t202)

* General Motors Co Chief Executive Mary Barra took new steps on Monday to revamp the auto maker’s senior staff as it copes with the internal and external fallout from recent massive and troubled safety recalls. GM said its heads of human resources and communications had left the company Monday. GM said the two left to pursue “personal interests” and their exits weren’t connected to a nearly decade-long delay in recalling vehicles. (http://ift.tt/1t4t2gh)

* A federal court has barred Medtronic Inc from selling its new artificial heart valve to most patients in the United States, despite finding that the device is “safer” and has “a lower risk of death” than a competing device. (http://ift.tt/1gZ5yzG)

* A federal appeals court struck down part of a controversial rule requiring publicly traded U.S. companies to say whether their products contain certain minerals from war-torn central Africa, citing free-speech concerns. (http://ift.tt/1gZ5yzJ)

* Mt. Gox founder Mark Karpeles said he would not come to the United States later this week to answer questions about the Japanese bitcoin exchange’s U.S. bankruptcy case, Mt. Gox lawyers told a federal judge on Monday. Mt. Gox’s bankruptcy lawyers said that Karpeles is “not willing to travel to the U.S.,” despite an order from Bankruptcy Judge Stacey Jernigan. (http://ift.tt/1gZ5yzK)

* More than 51,500 stockbrokers failed a basic exam needed to sell securities at least once, according to data that Wall Street regulators don’t disclose to investors, and those who repeatedly failed have on average worse disciplinary records. Securities regulators, notified this month of the Journal analysis, said they would consider giving more information to investors. (http://ift.tt/1gZ5yzN)

 

FT

Ukraine’s central bank raised its benchmark interest rate for the first time in eight months in an effort to shore up its currency and rein in inflation as its political crisis deepens.

Spanish telecoms provider Telefonica SA is offering to lease some spectrum to a German competitor in a bid to secure EU antitrust approval for its proposed takeover of KPN’s E-Plus unit in Germany.

Glencore Xstrata Plc has offered $1.3 billion to buy Chad-focused oil company Caracal Energy underscoring its ambition to expand upstream in the oil sector.

Italian Prime Minister Matteo Renzi proposed new managers for state-backed companies such as oil major Eni and defence group Finmeccanica in a shake-up that tests Renzi’s pledge to break with old-style cronyism.

Security company G4S is facing criticism from shareholders for announcing a big pay rise for its new chief executive, despite a recent scandal involving the overcharging of UK taxpayers for tagging offenders.

Google has bought dronemaker Titan Aerospace in an attempt to provide Internet access to more parts of the world.

 

NYT

* In the first major shake-up of General Motors Co’s senior management since the company announced a wide-ranging recall in February, its chief spokesman and head Washington adviser, and its top human resources executive have left the company. (http://ift.tt/1t4t5sL)

* Investors and analysts feared the worst from Citigroup Inc , the global bank that has been besieged for months by regulatory problems and an industry-wide trading slump. But Citigroup managed to beat Wall Street expectations on Monday, with a 4 percent increase in first-quarter profits, compared with a year earlier. (http://ift.tt/1t4t5IY)

* Last week, Sotheby’s defended itself against activist investor Daniel Loeb by questioning both his strategy and his credentials in the art world. On Monday, Loeb sought to rebut criticisms of both. In a 30-page document, Loeb’s Third Point hedge fund laid out its case to shareholders about why it should win three seats on the auction house’s board. (http://ift.tt/1t4t2gr)

* For rent and utilities to be considered affordable, they are supposed to take up no more than 30 percent of a household’s income. But that goal is increasingly unattainable for middle-income families as a tightening market pushes up rents ever faster, outrunning modest rises in pay. (http://ift.tt/1gZ5yzS)

* Even as the cost of prescription drugs has plummeted for many Americans, a small slice of the population is being asked to shoulder more and more of the cost of expensive treatments for diseases like cancer and hepatitis C, according to a report to be released on Tuesday by a major drug research firm. (http://ift.tt/1t4t5J0)

 

Canada

THE GLOBE AND MAIL

* IT expert Peter Faist, swept up in a criminal probe into the alleged destruction of government records, agreed to testify at a committee of the Ontario legislature via videoconference. (http://ift.tt/1t4t2gt)

* Conservative senators are recommending the Canadian government abandon plans to exempt certain fundraising calls from election spending limits, one of nine changes to the controversial Fair Elections Act recommended unanimously by a Senate committee. (http://ift.tt/1t4t2gv)

Reports in the business section:

* The hundreds of Canadians whose social insurance numbers were stolen from the Canada Revenue Agency in a Heartbleed breach likely won’t find out they were hit for several days. The CRA announced Monday, following a temporary shutdown of its public online services caused by the Heartbleed Internet bug, that about 900 social insurance numbers were stolen from its computers. (http://ift.tt/1t4t5J8)

NATIONAL POST

* Canadian defence and diplomatic officials have been quietly working on plans for possible Canadian military missions – as well as shoring up non-religious groups on the ground – in Syria as its three-year civil war continues. Internal documents obtained by the Ottawa Citizen show National Defence has drawn up at least five scenarios in which it could become involved in Syria’s ongoing civil war. (http://ift.tt/1gZ5Bvn)

* One month after she resigned as Alberta Premier amid a series of spending scandals, Alison Redford is back in the spotlight for revelations that she took her daughter on 50 government flights, including a long weekend to Jasper taken at the height of cleanup efforts for the 2013 floods. (http://ift.tt/1gZ5Bvo)

FINANCIAL POST

* Western cable giant Shaw Communications Inc said Monday it plans to trim 3 percent of its workforce as it consolidates several of its operations into more streamlined divisions. (http://ift.tt/1gZ5yQg)

* Canada’s financial regulator has unveiled a set of proposed guidelines for mortgage insurance providers aimed at tightening standards around underwriting governance and risk management. (http://ift.tt/1t4t2wM)

 

China

CHINA SECURITIES JOURNAL

– Further reform of real estate markets calls for a long-term mechanism to increase supply, instead of short-term stimulus, an editorial said, commenting on rumours that restrictions on property development are likely to be eased at local level.

– The China Insurance Regulatory Commission (CIRC) is going to explore multiple channels to fulfill the financing needs in infrastructure construction in the urbanisation process, including using preferred shares, said Wang Zuji, vice chairman of the CIRC.

SHANGHAI SECURITIES NEWS

– Sources said China’s insurance regulators are conducting the first round of inspections into domestic companies’ investment risks within the insurance industry, in particular possible inside trading.

CHINA BUSINESS NEWS

– Analysts expect the economic growth rate for the first quarter of 2014 to come in around 7.5 percent.

CHINA ECONOMIC WEEKLY

– China’s local governments have been relying too much on income generated by selling lands, with Zhejiang and Tianjin paying off two thirds of governments’ debts through land sales in 2012, according to auditing data released by provincial governments.

SHANGHAI DAILY

– The capacity of Pudong International Airport’s Terminal-1 will rise to 36 million passengers a year from the current level of 20 million with the addition of a whole new floor to be undertaken. This major project is set to get under way this year, said the Shanghai Airport Authority.

CHINA DAILY

– “After the first round of ballyhoo, the China (Shanghai) Pilot Free Trade Zone (FTZ) has not yet excited enterprises with any tangible breakthrough,” wrote an editorial blaming the Shanghai municipal government for the failure of the FTZ to attract investor interest by enacting significant reforms.

PEOPLE’S DAILY

– China’s Central Commission for Discipline Inspection and Supervision Department made public of 220 cases of CCP members’ misbehaviour from April 8 to 11, with their names posted on the department’s website. It has recently opened a reporting channel for Internet users to facilitate the supervision and punishment over the party members.

Britain

The Times

BARCLAYS BOWS TO SHAREHOLDER PRESSURE BY OUSTING PAY CHIEF

Sir John Sunderland has been ditched as the head of Barclays’ remuneration committee in an attempt to placate angry shareholders days before its annual meeting.

CO-OP STAFF TELL BOARD IT’S JEOPARDISING THEIR JOBS

Representatives of some of the Co-operative Group’s 90,000-strong workforce have waded into the row at the stricken mutual, accusing board members of indulging in “petty politicking” and putting livelihoods at risk.

NEWLY FLUSH GLENCORE SPLASHES OUT IN CHAD

Glencore Xstrata has acquired Caracal Energy , its partner in oil-producing assets in the central African country of Chad, in a deal that values the company at $1.35 billion.

The Telegraph

OUSTED G4S BOSS COLLECTS 400,000 POUNDS-A-YEAR PENSION Annual report details payments to Nick Buckles after a “challenging” year that culminated in the criminal tagging scandal.

SSP BEEFS UP BOARD AHEAD OF POTENTIAL 2-BLN-STG FLOAT Fast-food caterer appoints a trio of corporate heavyweights from the travel and retail worlds as it weighs up a London listing.

The Guardian

UK WORKERS RECEIVE FIRST REAL PAY RISE FOR FOUR YEARS Wage increases, forecast at 1.8 percent in February, finally overtake inflation at 1.6 percent to March, according to official data.

PEUGEOT CITROEN BOSS PLEDGES RETURN TO PROFIT BY 2018 Carlos Tavares unveils programme promising to reverse losses in Europe and emerging markets following sales decline.

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS
Domestic economic reports scheduled today include:
Empire State manufacturing survey for April at 8:30–consensus 8.0
Consumer Price Index for March at 8:30–consensus up 0.1% from prior month
Long-term Treasury International Capital flows for February at 9:00–consensus $30B
NAHB housing market index for April at 10:00–consensus 49

ANALYST RESEARCH
Upgrades

Basic Energy (BAS) upgraded to Hold from Sell at Wunderlich
Beacon Roofing (BECN) upgraded to Buy from Neutral at SunTrust
Carlisle (CSL) upgraded to Outperform from Market Perform at FBR Capital
Citigroup (C) upgraded to Outperform from Market Perform at Bernstein
EnerNOC (ENOC) upgraded to Overweight from Neutral at JPMorgan
Equinix (EQIX) upgraded to Outperform from Perform at Oppenheimer
Estee Lauder (EL) upgraded to Conviction Buy from Buy at Goldman
General Cable (BGC) upgraded to Buy from Neutral at Longbow
Ingram Micro (IM) upgraded to Buy from Neutral at Citigroup
Key Energy (KEG) upgraded to Hold from Sell at Wunderlich
MasterCard (MA) upgraded to Buy from Neutral at Janney Capital
MedAssets (MDAS) reinstated with an Outperform at Raymond James
Morgan Stanley (MS) upgraded to Buy from Neutral at BofA/Merrill
New York & Co. (NWY) upgraded to Buy from Neutral at Janney Capital
Pier 1 Imports (PIR) upgraded to Overweight from Equalweight at Barclays
Qlik Technologies (QLIK) upgraded to Buy from Neutral at Mizuho
Sealed Air (SEE) upgraded to Outperform from Neutral at Macquarie
Veeco (VECO) upgraded to Buy from Hold at Berenberg
Visa (V) upgraded to Buy from Neutral at Janney Capital
Yahoo (YHOO) upgraded to Outperform from Neutral at Macquarie

Downgrades

AXIS Capital (AXS) downgraded to Market Perform from Outperform at Raymond James
Diamondback Energy (FANG) downgraded to Neutral from Buy at SunTrust
IBM (IBM) downgraded to Neutral from Buy at Citigroup
International Paper (IP) downgraded to Neutral from Buy at Longbow
PetSmart (PETM) downgraded to Underperform from Neutral at BofA/Merrill
RockTenn (RKT) downgraded to Neutral from Buy at Longbow
Sharp (SHCAY) downgraded to Underperform from Hold at Jefferies
Travelers (TRV) downgraded to Market Perform from Outperform at Raymond James
Wal-Mart (WMT) downgraded to Underperform from Market Perform at William Blair

Initiations

Amber Road (AMBR) initiated with a Buy at Canaccord
Amber Road (AMBR) initiated with a Buy at Needham
Amber Road (AMBR) initiated with a Buy at Stifel
Amber Road (AMBR) initiated with an Outperform at Pacific Crest
Borderfree (BRDR) initiated with a Buy at Canaccord
Borderfree (BRDR) initiated with a Sector Perform at RBC Capital
Borderfree (BRDR) initiated with an Outperform at Credit Suisse
Borderfree (BRDR) initiated with an Outperform at Pacific Crest
Dean Foods (DF) initiated with a Buy at BB&T
Halozyme (HALO) initiated with a Buy at Citigroup
Repligen (RGEN) initiated with a Buy at Jefferies
Spansion (CODE) initiated with a Buy at Sterne Agee
TPG Specialty Lending (TSLX) initiated with a Buy at BofA/Merrill
TPG Specialty Lending (TSLX) initiated with a Buy at Janney Capital
TPG Specialty Lending (TSLX) initiated with an Equalweight at Barclays
Versartis (VSAR) initiated with a Buy at Canaccord
Versartis (VSAR) initiated with a Buy at Citigroup
Versartis (VSAR) initiated with an Overweight at Morgan Stanley

COMPANY NEWS

Zebra Technologies (ZBRA) said it will acquire Motorola’s (MSI) enterprise unit for $3.45B
Blackhawk (HAWK) completed its spin-off from Safeway (SWY)
Whirlpool (WHR) boosted its dividend 20% to 75c per share and said its board approved a $500M share repurchase plan
FedFirst Financial (FFCO) announced a deal to merge with CB Financial Services in a deal valued at $54.5M, entitling FedFirst shareholders to receive $23.00 per share in cash or shares of the new combined company
Pep Boys (PBY) said it expects higher tire prices to weigh on revenue through Q2
Axiall (AXLL) forecast Q1 EBITDA $65M-$70M
Merck (MRK) said the FDA approved the company’s GRASTEK tablet

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Infosys (INFY), Pinnacle Financial (PNFP), Sensient (SXT), Bank of the Ozarks (OZRK)

Companies that missed consensus earnings expectations include:
Pep Boys (PBY)

NEWSPAPERS/WEBSITES

GE (GE) CEO may give up leadership earlier than 20-year tenure, WSJ says
Duke Energy (DUK) directors targeted over ash spill, FT reports
Samsung (SSNLF): Gains in smartphone market the result of strategy shift, WSJ reports
Herbalife (HLF) under investigation by NY AG Schneiderman, NY Post reports
Maker Studios stays with Disney (DIS) offer, Re/code says
Patients paying much more for specialty drugs (AZN, BMY, LLY, GSK, JNJ, MRK, NVS, PFE, RHHBY, SNY), NY Times reports
Aleris looking to sell recycling, alloy segment, WSJ reports
Google Glass (GOOG) goes on sale to U.S. residents today, USA Today reports

SYNDICATE

City Office REIT (CIO) 5.8M share IPO priced at $12.50
Galena (GALE) files to sell 6M shares of common stock for holders
National General (NGHC) files to sell 12.82M shares of common stock for holders
Paycom Software (PAYC) 6.645M share IPO priced at $15.00
TransEnterix (TRXC) 12.5M share Secondary priced at $4.00

 

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One can see that while the traditional 6:00 AM USDJPY buy program is just duying to resume aggressive upward momentum ignition, futures are still leery and confused by the recent post-open high beta selloffs. Then again, things like yesterday’s ridiculous no news 3:30pm ramp happen and confused them even more just as momentum is about to take a downward direction. Stocks in Asia (ex-China) advanced amid a reversal in sentiment after Citigroup (+4.15%) inspired positive close on Wall Street, however Shanghai Comp (-1.4%) underperformed as concerns over GDP data on Wednesday following weak money supply data weighed on sentiment. Stocks remained on the back foot (Eurostoxx50 -0.42%), with Bunds supported by the release of lower than expected German ZEW survey and also ongoing concerns surrounding the stand-off between Ukraine/Russia. Short-Sterling bear steepened after UK CPI fell to its lowest level since October 2009, but house prices across Britain posted its biggest rise since June 2010, reviving concerns over an overheating market.

Turning to the day ahead, the focus in the morning will be on the April ZEW surveys for Germany and the Euro area. Before the US market open, the focus will be on the latest US consumer inflation report where consensus expects a +1.4% and +1.6% YoY reading in the headline and core, and the Empire manufacturing survey. The latest NAHB homebuilder sentiment index will be released shortly after. A number of US industrial large-caps are due to report before the US open including Coca-Cola and Johnson & Johnson. Tech heavyweights Yahoo! and Intel’s earnings come shortly after the closing bell. Yellen’s  will be making some opening remarks at the Atlanta Fed’s Financial Market conference. She is due to appear via video conference for 15 minutes only, so we’re unsure if there will be too much she will say on monetary policy. A number of speakers will be participating/presenting at the conference today including Nobel laureate Joseph Stiglitz from Columbia University and Charles Plosser from the Philly Fed.

Bulletin headline summary from Bloomberg and RanSquawk

• Treasuries little changed amid decline in Chinese and European stocks, copper and oil on China growth concern; trading may be quiet with market participants unwilling to take positions before long holiday weekend.
• China’s money supply grew less than forecast and the broadest measure of credit fell 19% from a year earlier in March before data that’s expected to show economic growth slowed in 1Q;  yuan traded in Hong Kong fell to a 14-month low as PBOC cut its onshore fixing to the weakest since September
• China’s loss of economic momentum in 1Q was deeper than the most widely-cited data will show, according to analyst forecasts for a gauge that’s gaining increasing recognition
• The U.S. and EU  deliberated deepening sanctions against Russia for stoking unrest in eastern Ukraine, while Putin said he’s being called on to intervene in the former Soviet republic
• EU is reluctant to introduce stronger measures that could threaten its already fragile economic recovery
• Japan’s population slid for a third year with the proportion of people over the age of 65 rising to a record, underscoring the challenge the world’s most-indebted economy faces in financing its aging society
• Sovereign yields mostly lower. Asian stocks mixed, Nikkei +0.6%, Shanghai -1.4%. European equity markets, U.S. stock futures fall. WTI crude, gold and copper lower

US Event Calendar

• 8:30am: Empire Manufacturing, April, est. 8 (prior 5.61)
• 8:30am: CPI m/m, March, est. 0.1% (prior 0.1%);
  • CPI Ex Food and Energy m/m, March, est. 0.1% (prior 0.1%);
  • CPI y/y, March, est. 1.4% (prior 1.1%)
  • CPI Ex Food and Energy y/y, March, est. 1.6% (prior 1.6%)
• 9:00am: Net Long-term TIC Flows, Feb. est. $30b (prior $7.3b); Total Net TIC Flows, Feb. (prior $83b)
• 10:00am: NAHB Housing Market Index, April, est. 50 (prior  47)
• POMO 11:00am: Fed to purchase $1.75b-$2.25b in 2020-2021 sector

Fed Speakers

• 8:30am: Fed’s Lockhart speaks at Atlanta Fed conference at Stone Mountain, Ga.
• 8:45am: Fed’s Yellen speaks via video to Stone Mountain conference
• 3:00pm: Fed’s Plosser moderates panel discussion at Stone Mountain
• 4:00pm: Fed’s Rosengren speaks in Bangor, Maine
• 8:00pm: Fed’s Kocherlakota speaks in Fargo, N.D Supply

EU & UK Headlines

Risk averse sentiment failed to support Gilts, which underperformed its peers after the release of the latest UK inflation data matched median estimates and brought the gap between inflation and average wage growth to its narrowest since April 2010, while the ONS House Prices posted its biggest rise since June 2010. Analysts at Citi believe that market is too complacent on GBP rates, pointing to the fact that no full rate increased is priced in until at least March 2015, with economists at the bank expecting the first rate hike to be delivered at November meeting this year.

At the same time, Bunds remained in the green, with prices supported by the cautious sentiment amid the ongoing stand-off between Ukraine and Russia, as well as the release of weaker than expected German ZEW survey.

US Headlines

Going forward, market participants will get to digest the release of the latest US Empire Manufacturing and CPI reports, as well as earnings by Intel, J&J , Coca-Cola and Yahoo!.

Equities

Stocks remained on the back foot this morning (Eurostoxx50 -0.42%), with basic materials leading the move lower following trade update by Rio Tinto, where the company blamed adverse weather conditions for missing some metrics. Also of note, reports of Monte Paschi (-8.3%) planning a capital increase resulted in the FTSEMIB under performing its peers, while the SMI remained in the green and was supported by Roche, as well as Nestle.

FX

Despite coming under pressure following weaker than expected UK BRC LfL data overnight and also ahead of the CPI data this morning amid rumours of a weaker number, the pair staged an impressive come back and moved back to unchanged after all major data points came in line with exp. , while the ONS House Price data for Feb posted its fastest Y/Y rise since June 2010.

The release of weaker than expected money supply data from China, which comes ahead of the GDP report on Wednesday, saw the PBoC set the CNY fix at its weakest since September 17th, consequently pushing USD/CNY to trade at its highest level since the start of the month. Also of note, RBA minutes reiterated AUD high on a historical basis and rates to stay stable in the medium term.

Commodities

Commodities are broadly lower, with particular focus on spot gold, which remains under pressure following slower than expected money supply data from China, which comes ahead of the GDP release tomorrow, and also after the world gold council predicted that Chinese demand for gold will fall this year before rising by 25% over the next 4 years as the population gets wealthier. Furthermore, according to Citigroup, China’s commodity demand reached short-term bottom with commodity demand expected to pick up in H2,

Regarding the situation in Ukraine, Germany’s RWE has started reverse gas supplies to Ukraine through Poland, in accordance with the contract, the supplies’ volume may reach up to 10 billion cubic meters per year.

* * *

In conclusion, here is Jim Reid’s overnight recap

Taking a quick look at Asian markets overnight, it’s been a mixed overnight session with the Nikkei (+0.8%) clawing back some its 7%+ losses over the last week as USDJPY tests the 102 level (101.9 as we type). A lunchtime meeting between the BoJ’s Kuroda and PM Abe was rather uneventful. Kuroda said he did not receive any requests on monetary policy from Abe but the two agreed to revive their practice of meeting monthly. Chinese equities are softer today (HSCEI -1.4%) after data showed that China’s M2 money supply data grew at 12.1 % yoy (vs 13.0% expected) which is the slowest pace since 2001. Shanghai and COMEX copper fell 0.4% and 0.6% respectively in response to the Chinese monetary data. There was minimal reaction to the RBA’s April minutes where the central bank reiterated its neutral stance and noted a rise in the AUSUSD in recent months. The AUDUSD is 0.4% weaker today. In India the continuing elections are the prime focus – a poll taken on Monday by NDTV suggested that the nationalist pro-reform BJP opposition party is set to win a narrow majority in elections (Reuters). There is some caution around the polls though given that opinion polls in 2004 wrongly predicted victory for a BJP-led alliance. Elsewhere the EURUSD (-0.1% overnight) continues to edge lower after the recent dovish ECB comments. The Bank of France’s Noyer said yesterday that the EUR’s gain over the last year has been “not appropriate” and said there was no question the ECB could find enough assets to purchase if needed.

The cautious sentiment that prevailed during the European morning yesterday (on the back of Ukraine/Russia headlines) eventually gave way to firmer price action as the US markets opened. Equities were already ticking upwards midway through the European session but Citigroup’s earnings before the US markets opened gave risk sentiment a further boost. The bank reported EPS of $1.30 on revenues of $20.1bn, both well above consensus estimates. The details were somewhat messy though with one-off items including significant gains from loan loss reserve releases and better revenues from Citi Holdings (the non-core part of the bank) contributing to the result. There was an 18% drop in revenues from Citi’s fixed income trading business, but this was consistent with JPM’s result on Friday and was offset by a 10% rise in Citi’s equities trading revenues. Another setback in the bank’s Mexican unit also clouded the result. Nevertheless the stock closed 4.4% higher, following a tumultuous few months which included last month’s rejection of the bank’s capital plan by the Fed. Citigroup’s stock is down 8.5% in the YTD, 11 percentage points worse than the 2.5% gain in the S&P 500 bank index. We’re still early in the reporting season but so far about 57% of the 30 S&P 500 companies who have reported earnings have beaten analyst earnings estimates. On the revenue side however, only 50% of companies have managed to do the same. We’ll provide our usual earnings tracker table in a few days time when we have a few more data points at hand.

Equities hit an intraday high soon after the release of retail sales (+1.1% vs +0.9% expected). The month-on-month gain was the highest since September 2012 and the growth was apparent across a number of categories including furniture (+1.0), building materials (+1.8%), general merchandise (+1.9%) and restaurant sales (+1.1%). DB’s economics team thinks the strong showing from discretionary retail categories was a sign that adverse weather effects have  dissipated. While EM as a whole has done well of late, it did give up some of its recent gains yesterday following another spiralling in tensions between Ukraine and Russia, playing out in the former’s eastern half. Government officials in both the EU and US have indicated that they may intensify sanctions against Russia soon, but will probably wait until the outcome of a summit on Thursday between the EU, US, Ukraine and Russian foreign ministers in Geneva. Gazprom US ADRs fell 4% yesterday with the prospect of stage 3 economic sanctions from the US and EU. Politico is reporting that President Obama and Putin spoke by phone on Monday to try and diffuse the situation. Russian CDS widened by 21bp and the Ukrainian Hryvnia managed to find some stability after Ukraine’s Central Bank increased its discount rate from 6.5% to 9.5%.

Turning to the day ahead, the focus in the morning will be on the April ZEW surveys for Germany and the Euro area. Before the US market open, the focus will be on the latest US consumer inflation report where consensus expects a +1.4% and +1.6% YoY reading in the headline and core, and the Empire manufacturing survey. The latest NAHB homebuilder sentiment index will be released shortly after. A number of US industrial large-caps are due to report before the US open including Coca-Cola and Johnson & Johnson. Tech heavyweights Yahoo! and Intel’s earnings come shortly after the closing bell. Yellen’s  will be making some opening remarks at the Atlanta Fed’s Financial Market conference. She is due to appear via video conference for 15 minutes only, so we’re unsure if there will be too much she will say on monetary policy. A number of speakers will be participating/presenting at the conference today including Nobel laureate Joseph Stiglitz from Columbia University and Charles Plosser from the Philly Fed.

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Today’s ‘bounce’ in US equity markets is not translating into Asian equity market strength as China, India, Indonesia, and Thai stocks are fading. Copper is crumbling and just stopped out Dennis Gartman’s long. In China, the PBOC withdrew 172bn Yuan (highest since Feb 2013) and pushed the currency back towards its weakest since Feb (which is the weakest since the PBOC began its erstwhile carry-killing-policy. Lots of odd moving-parts in Chinese data tonight with M2 YoY growth tumbling to 12.1% (missing expectations) – its slowest since Jan 2001 but Total Social Financing smashed expectations at 2.07tn Yuan (vs 1.86tn expected). It seems, try as the PBOC might to control it, credit creation continues to balloon in China.

China’s Yuan is rapidly heading back towards 15-month lows… (despite Jack Lew’s insistence that it strengthen)

 

Copper futures plunged below Dennis Gartman’s long stop – closing out another losing trade (or winning if you faded him?)

 

M2 Growth tumbles to its lowest since Jan 2001…

 

But Total Social Financing soared above expectations…

 

And the PBOC pulled 177bn Yuan liquidity from the market via Repo

• *PBOC SAYS 93B YUAN OF 28-DAY REPO SOLD AT 4%
• *PBOC SAYS 79B YUAN OF 14-DAY REPO SOLD AT 3.8%

The most since Feb’s lows in Yuan…

 

Charts: Bloomberg

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It seems like it was only yesterday (actually it was early November) when infamous CFTC commissioner, legendary threat to gold manipulators nowhere, and Alexander Godunov impersonator, Bart Chilton made a very dramatic exit stage left.

Here is what we said at the time:

Having “left traders in their own” during the shutdown, Chilton expressed “excitement” at his new endeavours after sending his resignation letter to President Obama this morning (more poetry? – or body doubles?) “I’m reminded of the old Etta James song, ‘At Last,'” said Mr. Chilton, one of the agency’s three Democratic members. “At last, we’ve got this rule here,” and at last, he would be leaving the CFTC. This leaves us wondering whether Chilton, no longer burdened by the shackles of his meagre compensation, perhaps can finally do what he has been promising to do for years – become a whistleblower – after all he has insinuated so many times he knows where all the “dirt” is; unless, of course, it was all for show.

The rhetorical answer to the rhetorical question: of course it was all for show, confirmed moments ago when Chilton became just the latest “regulator” to take the great revolving door out of a worthless public service Washington office into a just as worthless, but much better paying private-sector Washington office. Presenting the latest employee of DLA Piper, the largest law firm in the US, and possibly the world, by number of partners – Bart Chilton, poet.

From DLA Piper.

Former CFTC Commissioner Bart Chilton joins DLA Piper as senior policy advisor in Washington, DC

 

DLA Piper announced today that former Commodity Futures Trading Commission Commissioner Bart Chilton is joining the firm on April 15 as a senior policy advisor in the Washington, DC, office.

Commissioner Chilton’s 30-year career in government service includes working in the US Congress and serving in the executive branch during the Clinton, Bush and Obama administrations. He has extensive experience in the development and debate of major public policy related to the financial services industry, including significant market and regulatory changes impacting the full spectrum of derivatives users.

 

Commissioner Chilton was nominated and confirmed as a CFTC Commissioner during the Bush and Obama Administrations (2007 and 2009), and he chaired the CFTC’s Energy and Environmental Markets Advisory and Global Markets Advisory committees. His tenure was marked by landmark efforts to assist industry participants with the myriad requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which created a complex regime for the regulation of the swaps marketplace.

 

“Bart will bring unmatched experience and insight as one of the commissioners who oversaw the enactment and implementation of Dodd-Frank,” said Jay Smith, chair of DLA Piper’s US Corporate and Finance practice. “With many of the key derivatives requirements now coming to fruition, Bart will be an invaluable resource for clients who will be subject to increased regulation over the next few years.”

 

In 2008, Commissioner Chilton led the Obama Transition Team with regard to the US Department of Agriculture. Prior to joining the CFTC, in 2005, he was a Schedule C political appointee of President Bush at the US Farm Credit Administration. From 2001 to 2005, Commissioner Chilton was a senior advisor to Senator Tom Daschle, who is currently a senior policy advisor at DLA Piper.

 

From 1995-2001, Commissioner Chilton was a Schedule C political appointee of President Clinton, where he rose to deputy chief of staff to US Secretary of Agriculture Dan Glickman. Earlier in his career, Commissioner Chilton worked in the US House of Representatives, where he served as legislative director for three different members of Congress and as the executive director of the bipartisan Congressional Rural Caucus.

 

“The addition of Bart will enhance the capabilities and visibility of our global swaps practice, as well as our access to other key decision-makers with regard to recent rulemaking,” added Marc Horwitz, head of DLA Piper’s Derivatives practice. “In addition to providing his unique insight on Dodd-Frank, Bart will assist our cross-border team in navigating thorny issues surrounding equivalency with comparable regulations that are being enacted in other jurisdictions.”

Yes, we did harbor hopes that Chilton could actually become a whistleblower. But the prospect of living in the apartment below Snowden collecting nothing while actually doing some real work for the first time in his life, surely seemed far less apetizing than sitting in a glass corner office at 500 Eighth Street, NW, collecting over a million a year for doing nothing.

Appropriately enough, the DLA press release concludes with the following.

Commissioner Chilton is also the author of Ponzimonium: How Scam Artists Are Ripping Off America, a consumer education book published by the CFTC.

So, in retrospect, a non-fiction autobiography too?

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Soaring student debt, competition from online programs and poor job prospects for graduates are shrinking the applicant pools for many universities and, as Bloomberg reports, the National Association of Independent Colleges and Universities warns "there will clearly be some institutions that won’t make it..through these difficult steps." Rather stunningly, Moody’s found that expenses are outpacing revenue at 60 percent of the schools it tracks even as many try to slash their way to balanced budgets," and concluded "what we’re concerned about is the death spiral… this continuing downward momentum for some institutions." As Harvard professor Clayton Christensen has warned, as many as half of the more than 4,000 universities and colleges in the U.S. may fail in the next 15 years, and is "not sure a lot of these institutions have the cushion to experiment with how to stay afloat."

As Bloomberg reports,

Dowling College (on Long Island), which got a failing grade for its financial resources from accreditors last month, epitomizes the growing plight of many small private colleges that depend almost entirely on tuition for revenue. It’s been five years since the recession ended and yet their finances are worsening. Soaring student debt, competition from online programs and poor job prospects for graduates are shrinking their applicant pools.

As the debt loads and poor payoffs finally meet market forces…

“What we’re concerned about is the death spiral — this continuing downward momentum for some institutions,” said Susan Fitzgerald, an analyst at Moody’s Investors Service in New York. “We will see more closures than in the past.”

 

But Harvard Business School professor Clayton Christensen has much mor dire warnings of the technological shift…

as many as half of the more than 4,000 universities and colleges in the U.S. may fail in the next 15 years. The growing acceptance of online learning means higher education is ripe for technological upheaval, he has said.

 

“I’m not sure a lot of these institutions have the cushion to experiment with how to stay afloat,”

 

…

 

“There will clearly be some institutions that won’t make it and there will be some institutions that will be stronger because of going through these difficult steps,” said David Warren, president of the Washington-based National Association of Independent Colleges and Universities.

The flood of credit to reflate yet another bubble has simply mispriced yet another critucal aspect of society past…

“We haven’t hit bottom yet,” said Glenn Harlan Reynolds, a law professor at the University of Tennessee in Knoxville and author of the book, “The New School: How the Information Age Will Save American Education From Itself.” Students are shopping for a less expensive education as the cost of college has increased and the job market worsened, he said.

But, rather worryingly for the future of that exponential trend…

Moody’s found that expenses are outpacing revenue at 60 percent of the schools it tracks even as many try to slash their way to balanced budgets, according to Fitzgerald.

Time for the government to find another credit trannsmission channel bubble to blow

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Submitted by John Browne via Euro Pacific Capital,

For decades many of us in the hard money world have speculated that cloak and dagger activity by large financial interests has played a large role in determining performance in the gold market. The focus of this alleged manipulation is believed to be in the London market, and has been widely referred to as "The London Fix." However those who have blown the whistle have been dismissed as alarmists, gold bugs, conspiracy theorists or worse. But recent revelations should bring us closer to the truth.

On March 11, 2014, the Wall Street Journal reported that AIS Capital Management had filed a class action suit, against a number of large banks including, Barclay's PLC, Deutsche Bank, HSBC, and many others, alleging that the banks conspired to manipulate the price of gold for their own gain. This suit comes on the heels of official investigations in the UK and in Germany.

Like the London Inter Bank Offered [interest] Rate (LIBOR), the London Gold price forms a benchmark for the spot price for major gold metal transactions throughout the world. The LIBOR scandal rocked the financial world. But Germany's senior financial regulator declared possible gold manipulation as "worse than LIBOR". These words appeared to give new meaning to the word 'fix'. To get at the truth, it helps to try to follow the international flows of gold, to see who is buying, who is selling, and where the gaps may appear.

Major gold trading has long been shrouded in mystery. Despite returns required by the IMF, trading in the Far East is difficult to trace accurately. In 2009, China's central bank disclosed that its gold holdings had increased by 75 percent from 600 to 1,054 tonnes, or metric tons. According to Wikipedia, this made China the world's sixth largest holder.

Gold Field Mineral Services (GFMS) estimates the world's total gold production for 2013 was 2,982 tonnes. With an annual production of some 428 tonnes, according to Forbes Asia, China is the world's largest producer. But, like Russia, China exports no gold. If China's last three years annual assumed production is aggregated, China's 2009 declared holdings of 1054 tonnes should have increased since by some 1,284 tonnes, for a total of some 2,338 tonnes. This would make China one of the world's largest holders. But the story does not end there. China imports massive amounts mainly via Hong Kong and Shanghai.

According to Forbes Asia, the China Gold Association showed that China's gold consumption increased by 41 percent over 2012 to 1,176 tonnes in 2013. (China does not publish official numbers so discrepancies range in the hundreds of tonnes) Adding these imports to China's domestic production of 428 tonnes indicates that China accumulated at least 1,604 tonnes last year.  India's imports, as reported by Bloomberg, were 978 tonnes last year. Therefore, China and India together accumulated 2,582 tonnes or over 86 percent of total worldwide production of 2,982 tonnes.

Furthermore, combining China's aggregate domestic production and apparent imports indicates that she has now over 3,514 tonnes. Assuming the U.S. still owns all the gold held by the Fed, this would make China the world's second largest national owner.

In addition to China and India, Indonesia, Saudi Arabia and Thailand increased their gold holdings in 2013. As gold is a widely recognized representation of wealth, this represents a massive transfer of 'real' wealth from West to East.

Clearly, the massive Eastern demand for physical gold has made it much more difficult for Western central banks' mission to lower the market price of gold. That is unless Western central banks have been leasing out gold secretly to market buyers, who have been 'encouraged' politically, like Germany, not to take physical delivery?

When, at the beginning of 2013, Germany asked for the repatriation of just 300 tonnes of its holdings of 3,396 tonnes, the Fed asked for a five-year delayed delivery. By year's end, the Fed had sent Germany only 5 tonnes.

Although privately owned, partly by bankers, the Fed is audited only partially. Could it be that a large portion of the Fed's published gold holdings of 8,133.5 tonnes is now actually the property of other nations, like Germany?

Is China already the world's largest 'owner' as opposed to 'holder' of gold? If so, China, with a mature financial center in Hong Kong, already is further along the path than most have predicted towards challenging the vital reserve currency status and international credibility of the U.S. dollar.

Clearly the recent price rise in gold owes something to inflation fears, repressed interest rates and to the Ukrainian situation. In the meantime, a growing awareness of a possible serious and increasing shortage of physical gold and a decline in the power of western central banks to suppress the price, point to a resumption of the fundamental bull market in gold, despite a possible increase in fears of recession.

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