Tag: finance

The hunt for missing October continues.

Recall that over the weekend, one of the less reported stories was that Sweden had deployed its various army, navy and air force units to hunt down what was reportedly a damaged Russian sub that had sunk in the Stockholm archipelago, something which Russia vehemently denied.

Since then, things have escalated and as both the FT and RIA reported, Swedish authorities declared a safety distance of 10,000 meters (5.4 nautical miles) from all military vessels taking part in the search for the alleged foreign sub. 

According to the Swedish Expressen newspaper, air traffic over the search area has been suspended. Such a large area of Swedish airspace has not been cordoned off since the ’80s, the newspaper added. The fly ban will not affect passenger flights.

Swedish Navy vessels have reportedly sealed off a channel between Nynashamn and the island of Nattaro south of Stockholm. A large number of military vessels and helicopters are reported to be moving southward.

 

The Swedish Armed Forces first launched a major operation off the coast of Stockholm on Friday after receiving information, reportedly from a civilian, about the presence of an unknown underwater object in the region.

 

According to the Swedish Armed Forces, there have been three “very credible sightings” of an unknown object off the Swedish coast, suspected to be “foreign underwater activity.” Swedish Prime Minister Stefan Lofven stressed Monday that the ongoing operation is “not a submarine hunt,” but an “underwater investigation.”

But the key question remains, just whose sub is it that is missing? Earlier on Monday, a Russian Defense Ministry source told RIA Novosti that the unidentified object in Sweden could be a submarine belonging to the Dutch Navy. 

A spokesperson for the Royal Netherlands Navy told RIA Novosti that a Dutch submarine had recently visited Stockholm, but stated that it was no longer in Swedish waters when the “suspicious object” was first observed in the Stockholm archipelago.

Additionally, Bloomberg reported that a distress call caught in Swedish territorial waters on Oct. 17 has been incorrectly linked to presence of Dutch submarine, citing His Majesty’s Bruinvis, Karen Loos-Gelijns, spokeswoman for Defense Ministry says in e-mailed statement. She said the submarine went to Tallinn on Friday morning, stayed there over the weekend. She added that Dutch navy ships Tromp, Amsterdam, Evertsen, Zealand, submarine Bruinvis participated this month in international exercise Northern Archer in the Baltic Sea.

In other words, the Netherlands is refusing to take blame for the sub. As it Russia – recall that previously a spokesperson for the Russian Defense Ministry denied that the damaged sub belongs to Russia, stating that “there have been no extraordinary, let alone emergency situations involving Russian military vessels.”

But while the originating nation of the offending sub, if there is indeed one, refuses to step up, Sweden is starting to lose patience. According to an update by TheLocal.se, battleships, minesweepers, helicopters and more than 200 troops continue to scour the area where they believe the sub is located.

Sweden’s military has now been out on the hunt for five days, with the operation moving “across the archipelago” on Tuesday.

More:

Jesper Tengroth, press officer for the Swedish military, told The Local that the focus had switched from just the southern islands on Monday.

 

Swedish military vessels are now also patrolling open seas in the Danziger Gatt strait, news agency TT said.  But Tengroth would not give any further details about where Swedish ships and military units were stationed for “operational reasons”.

 

After three civilian sightings of suspicious activity in the Stockholm archipelago, Sweden’s Armed Forces have launched a full-scale investigation. 

In fact it has gotten to the point where Sweden may simply blow up the offending military equipment just to make the point that “The most important value of the operation – regardless of whether we find something — is to send a very clear signal that Sweden and its armed forces are acting and are ready to act when we think this kind of activity is violating our borders,” Supreme Commander General Sverker Göranson said.

As a result, Sweden’s military has announced that if it finds a suspect foreign vessel in the Stockholm archipelago, it is prepared to force it to the surface “with weapons if necessary”.

 “Our aim now is to force whatever it is up to the surface… with armed force, if necessary,” he added.

He added that submarines are “extremely difficult” to find, and that Sweden has never succeeded in the past when it came to tracking them down.

“And no one else has either,” he added.

If the sub is indeed Russian, it would be quite a hit for Sweden, which in more than a decade of hunting Russian U-boats in the 1980s and early nineties, never succeeded in capturing one, except in 1981 when the U137 ran aground several miles from one of Sweden’s largest naval bases, triggering an embarrassing diplomatic stand-off for Russia.

Early Tuesday afternoon, at least five naval ships were stationed for more than two hours in an area east of Ingarö, the closest reported point to the Swedish mainland since the operation began. DN reported that one of the ships had “made contact” with something, but General Göranson denied the claim.

 

Göranson’s comments to the Swedish media came after a nearly two-hour long meeting with Sweden’s defence committee behind closed doors.

 

They also followed reports in the Dagens Nyheter newspaper that there had been more than 100 reported sightings of a suspect vessel from members of the public in the past day  or so. “We’re still getting more reports, and I want to underline the fact that we’re happy about this,” Göranson added. 

Here is a cross-section of what has been alleged to be a Russian X-Ray/AC-12 class submarine, the Losharik.

In any event with every passing day, the surfacing of the damaged sub gets closer, assuming of course one exists. And if, as the local Swedish media reports allege, the sub does belong to Russia and the result if a major political humiliation for the Kremlin, will Putin just sit idly by, especially since what is going on close to Stockholm has become a regional spectacle. As the FT reported, “the Swedish military operation is being followed around the region. Edgars Rinkevics, Latvia’s foreign minister, wrote on Twitter at the weekend: “Closely following events in the Swedish territorial waters, may become a game changer of the security in the whole Baltic sea region.“

It may indeed, and the answer will be forthcoming. After all there is only so much air a sub can store.

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Presented with no comment…

 

 

Source: Investors

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It is now beyond ridiculous.

Recall yesterday we reported that according to Japan’s Economy Minister, Akira Amari, who over the weekend went full economic retard – rather than face reality that Abenomics currency devaluation printfest has crushed the consumer beyond all expectations, he blamed the weather for economic weakness: “including the effects of large typhoons and heavy rains in July and August, Japan’s 3Q economic situation is probably not a strong recovery.”

Of course, it is not his fault: he is merely piggybacking on what the US did in early 2014 when it blamed the collapse in China’s credit expansion which reverberated across the globe, crushing US GDP on “snow in the winter.”

And since everyone had been wrong about Q1 GDP (not to mention Treasury yields) and was thus willing to look the other way and “accept” a grossly ridiculous explanation (because only idiots would believe that $100 billion in potential GDP was wiped out as a result of several winter storms) over fears that they too be exposed as grossly incompetent pattern-chasing penguins, blaming the weather stuck as the excuse for everything that happened since January which was somewhat unexpected, and for which the true explanation, namely that there is no global recovery, was just too unpalatable.

So fast forward to last night, when instead of the much hoped for Chinese GDP drop – because it would certainly unleash the greatly delayed Chinese liquidity firehose so hoped for by all the BTFDers who need at least once central bailout per day to keep up the charade – China reported GDP which beat expectations, leading to many sad faces on Wall Street, and forcing Reuters to leak the infamous ECB buying corporate bonds article, since refuted, which served as the overnight ramping catalyst.

So what is the “explanation” for this unpleasant, for once, economic beat? Why, the weather of course! From Goldman”

3Q GDP data was better than our and market expectations. The seasonally adjusted, non-annualized qoq growth calculated by the NBS showed a modest slowdown from 2.0% to 1.9% while our estimate of qoq annualized growth accelerated from 6.9% to 8.5%.

 

September IP growth surprised the market on the upside and was mostly in line with our forecast. Among IP components, electricity production increased to 4.1% yoy, from -2.2% yoy in August. Cement production fell to -2.2% yoy, from 3.0% yoy in August. 

 

We believe the rebound was mainly because of the disappearance of the temperature distortion which could have lowered August IP by 1 ppt or more , see EM Macro Daily – China: Cool weather likely contributed to weak August activity growth, Oct 9, 2014.

Ah, the new normal, where every time central planning fails one can, and always does, just blame the weather. Because it is not reality.xls that is wrong. It is reality itself that is at fault.

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Existing Home Sales bounced back from the worst miss in 2014 in August to print 5.17mm SAAR – the highest since September 2013. Of course the surge is driven by Condos/Co-Ops (up 5.2%) rather than single-family homes (up 2.0%) and median home prices are the highest ever for a September at $209,700. It was not all ponies and unicorns though as Midwest saw sales plunge 5.6%. NAR’s Larry Yun has some crucial insight for why home sales are rising…”Economic instability overseas is leading to volatility in the stock market and is causing investors to seek safer bets [in housing],” so we assume he is disappointe dby the 1000s of Dow points we have surged off last week’s lows?

 

 

Lawrence Yun , NAR chief economist, says the improved demand for buying seen since the spring has carried into the fall. “Low interest rates and price gains holding steady led to September’s healthy increase, even with investor activity remaining on par with last month’s marked decline,” he said.

“Traditional buyers are entering a less competitive market with fewer investors searching for available homes, but may also face a slight decline in choices due to the fact that inventory generally falls heading into the winter.”

*  *  *

Regional Breakdown

In the Midwest, existing-home sales declined 5.6 percent to an annual level of 1.17 million in September, and remain 4.9 percent below September 2013. The median price in the Midwest was $165,100, up 4.9 percent from a year ago.

 

In the Southsales increased 5.0 percent to an annual rate of 2.12 million in September, and are now 1.4 percent above September 2013. The median price in the South was $180,900, up 5.1 percent from a year ago.

 

In the West existing home sales jumped 7.1 percent to an annual rate of 1.20 million in September, but remain 4.0 percent below a year ago. The median price in the West was $294,200, which is 4.0 percent above September 2013.

Inventories, Supply, Demand

Properties typically stayed on the market in September longer (56 days) than last month (53 days) and a year ago (50 days). Short sales were on the market for a median of 116 days in September, while foreclosures sold in 59 days and non-distressed homes typically took 55 days. Thirty-five percent of homes sold in September were on the market for less than a month.

And there is no return of the ‘normal’ homebuyer yet…

The percent share of first-time buyers continues to underperform
historically, remaining at 29 percent for the third consecutive month.
First-time buyers have represented less than 30 percent of all buyers in
17 of the past 18 months. 

All-cash sales were 24 percent of transactions in September, up slightly from August (23 percent) but down from 33 percent in September of last year. Individual investors, who account for many cash sales, purchased 14 percent of homes in September, up from 12 percent last month but below September 2013 (19 percent). Sixty-three percent of investors paid cash in September.

And finally, some more from Yun:

“Economic instability overseas is leading to volatility in the stock market and is causing investors to seek safer bets, which will likely keep interest rates in upcoming weeks hovering near or below where they are now,” said Yun. “This is welcoming news for consumers looking to buy, although they could temporarily become more cautious by less certain economic conditions.” 

So let’s hope stocks crash?

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Well it wouldn’t be the US equity market if something didn’t break…

 

• *NYSE MKT CASH EQUITIES MARKET IS EXPERIENCING AN ISSUE
• *NYSE: ISSUE IN PROCESSING MARKET QUOTES IN NASDAQ UTP SYMBOLS

Another day another ramp that disable retail from selling…

 

Coincidence?

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Clearly, Leung Chung-Ying, Hong Kong’s embattled leader, did not get the Jean-Claude Juncker memo that “when things are bad, you have to lie.” As The NY Times reports, Leung – rather stunningly – said overnight that it was unacceptable to allow his successors to be chosen in open elections, in part because doing so would risk giving poorer residents a dominant voice in politics. Instead, rather unsurprisingly, he backed Beijing’s position that all candidates to succeed him as chief executive, the top post in the city, must be screened by a “broadly representative” nominating committee appointed by Beijing, and offered several thinly veiled warnings on Monday that it was risky for the protesters to try the patience of the national authorities.

 

 

As The NY Times reports,

…

 

Mr. Leung’s blunt remarks reflect a widely held view among the Hong Kong elite that the general public cannot be trusted to govern the city well. His statements appeared likely to draw fresh criticism from the democratic opposition, and to inflame the street struggle over Hong Kong’s political future.

 

Representatives of his government are scheduled to hold televised talks with student leaders of the protests, who have said that Mr. Leung was defending a political system stacked against ordinary citizens.

 

Mr. Leung said that if “you look at the meaning of the words ‘broadly representative,’ it’s not numeric representation.”

 

“You have to take care of all the sectors in Hong Kong as much as you can,” he said, “and if it’s entirely a numbers game and numeric representation, then obviously you would be talking to half of the people in Hong Kong who earn less than $1,800 a month.”

 

“Then you would end up with that kind of politics and policies,” he continued.

*  *  *
Finally, we also note, Leung comments on the drivers of the pro-democracy movement…

He also raised again the suspicions of his government and of Beijing that “foreign forces” had played a role in the street protests, although he declined repeatedly to identify those forces or provide any examples.

 

“I didn’t overhear it in a teahouse, and it’s something that concerns us,” he said. “It’s something that we need to deal with.”

*  *  *
Mr. Leung offered several thinly veiled warnings on Monday that it was risky for the protesters to try the patience of the national authorities.

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Moments ago, McDonalds not only released earnings and revenues, both of which missed – something which was largely expected since the backward looking data had been telegraphed by MCD’s recent global selling collapse – blanketed by atrocious commentary, but it disclosed its September global retail sales which were for lack of a better word, a disaster, after reporting global sales which dropped 3.8%, below the 3.2% expected, and the worst global month since at least 2003. The pain was everywhere, with Europe plunging 4.2% (est -0.9%), Asia down 7.5%, and the US down a whopping 4.1%, far below the 2.8% expected, and also the worst month in over a decade.

 

In fact, McDonalds sales in the US have have now gone a whopping 11 months without posting a positive sales month, the longest stretch on record!

 

But while collapsing MCD sales are a combination of both the insolvent US consumer, who can no longer afford to buy either MCD or Coke (as we commented earlier) especially after purchasing the latest and greatest iThing on credit, as well as shifting tastes and eating the “cool food du jour”, things are only going to get worse from here.

Because in a world that is allegedly flooded with deflation, the one place where everyone considered safe for “dollar meals”, just got more expensive. Bloomberg reports:

Mike Hiner used to take his grandsons to McDonald’s (MCD) when they wanted a treat. With higher wage and food costs pushing up prices at the Golden Arches, he’s increasingly taking them to IHOP, Denny’s and Chili’s instead.

 

The loss of bargain-seeking customers like Hiner underscores a growing challenge for McDonald’s Corp.: While the company still offers several items for $1, its menu is quietly getting more expensive. McDonald’s said its prices were up about 3 percent through the end of June compared with 12 months earlier. That’s more than the 2.5 percent gain in prices for food Americans purchased away from their homes in the year through August, according to the Bureau of Labor Statistics.

 

The chain’s diminishing appeal among budget diners — coupled with rising meat costs — are projected to take a bite out of third-quarter earnings due to be reported tomorrow. Analysts estimate that McDonald’s revenue fell 1.8 percent to $7.2 billion in the period. Net income, which also were hurt by a food-safety scare in China, slid 11 percent to $1.36 billion, according to the projections.

And sure enough, see the charts above. But that is only the beginning:

Some Americans are extremely price sensitive, and any increases may send them elsewhere, said John Gordon, principal at San Diego-based Pacific Management Consulting Group, an adviser to restaurants and franchisees.

 

“If you encourage and kind of seed the notion that you can come in for a couple bucks and get some food — and then you can’t do that anymore — there’s bound to be a reaction,” he said.

There is also bound to be a reaction when the already broke US consumer maxes out their credit card on a telephone and forgets to eat.

The result has been that fast-food chains, long thought of as the cheapest place to grab a quick bite, may now have that reputation working against them, said Joel Cohen, president of Cohen Restaurant Marketing Group in Raleigh, North Carolina. The higher prices may be driving some customers to seek alternatives either at fast-casual chains like Panera Bread Co. (PNRA) or even at sit-down places, he said.

 

“It’s sticker shock,” Cohen said. “You’re up at price where you could just about be dining at a casual-dining restaurant.”

And when you hear the phrase “sticker shock” in the same sentence as a McDonalds dollar meal, you know the end is in sight.

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The awful news overnight of Total CEO Christophe de Margarie's death in a freak plane crash caused by the jet hitting a snow-plough on the runway has taken a darker twist. As RT reports, Russian prosecutors claim the driver of the snowplough was drunk, and the air traffic controller for the jet was an intern. However, his lawyer, however, says he was completely sober, due to a heart condition preventing him from drinking claiming "he was so sober at the time of the crash," adding "we don't want the blame for the accident falling on an ordinary man." Investigators added that "bad weather conditions and the possibility of a mistake by the pilot will also be considered." ITAR-TASS reports that Putin has sent his condolences and reached out to Francois Hollande, "Vladimir Putin has long known de Margerie and had a close working relationship with him."

 

The snowplough driver survived (while reports last night said he perished) – If proven guilty, the sentence for the driver under Russian law could be up to seven years in prison.

 

Video from the terible accident scene:

 

As RT reports,

Russian prosecutors claim the driver of the snowplow which crashed with Total CEO Christophe de Margerie’s jet was drunk. His lawyer, however, says he was completely sober, due to a heart condition preventing him from drinking.

 

“My client is suffering from an acute heart condition; he does not drink at all and his relatives and friends can testify to that,” Aleksandr Karabanov, the lawyer, said.

 

“He was sober at the time of the crash,” he also said, adding that a number of lawyers will be involved in Martynenkov’s defense. “We don’t want the blame for the accident to fall on an ordinary man,” he added.

 

Karabanov also made clear that he will insist on an independent expertise to determine the presence of alcohol in his client's bloodstream.

 

Russia’s Investigative Committee Vladimir Markin also told the reporters on Tuesday adding “there is a possibility that a number of airport staff will be suspended from carrying out their duties pending criminal investigation.” He also did not rule out the possibility of new arrests being made during the course of the investigation.

 

…

 

It has also been determined that the taxiing shortly before the crash was being coordinated by a traffic control intern, RIA Novosti was told by a source inside Vnukovo. The official spokesman for the airport has declined to comment. Air traffic control personnel will be tested for alcohol and drugs, the investigators said.

 

The black boxes have been uncovered and are being processed at this time.

And Putin has expressed condolences…

Russian President Vladimir Putin has expressed his condolences over the Total CEO's death. TASS cited his spokesman as saying that "Vladimir Putin has long known de Margerie and had a close working relationship with him."

 

“I am shocked at the news,” the Russian leader conveyed to French President Francois Hollande.

 

“I ask that you offer my sincerest wishes and condolences to the friends and families of Christophe de Margerie – a renowned French entrepreneur, who has helped spearhead a great number of join projects, which have been the source of a long and fruitful partnership between Russia and France in the energy sphere,” Putin continued.

 

“When we lost Christophe de Margerie, we lost a real friend to our nation, and we shall hold his memory very dear.”

*  *  *

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It is unclear what the catalyst is – aside from the bounce back from The FT’s rejection of Reuters rumor-spreading about ECB corporate bond buying but instead of the usual mornig smackdown, precious metals are spiking higher. Gold hit $1255 – its highest in over 5 weeks).

 

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First Swiss Gold Poll Shows Pro-Gold Side In Lead At 45%

The first poll of how the Swiss people will vote in the “Save Our Swiss Gold” initiative on November 30th shows that the Swiss are leaning towards voting for the pro-gold initiative. 

Gold Initiative Poll Results –  20 Minuten

The poll had quite a large sample of 13,397 people from all over Switzerland who participated in the first phase of the 20 Minuten online survey on October 15. 

The poll shows that 45% approve the Swiss gold initiative and 39% are against. There are 29% firm yes voters and 28% firm no voters (see graph). The poll shows 16% are leaning towards a yes or are “more yes” and 11% are leaning towards a no or are “more no.” 

20 Minuten or 20 Minutes in English, is a very popular German language free daily newspaper and online paper in Switzerland, published in a tabloid format and online.

Swiss Flag

The political scientist Lucas Leeman and Fabio Wasserfallen organised the survey according to demographic, geographic and political variables and it is weighted so that the sample corresponds as closely as possible the structure of the voting population according to 20 Minuten.

There are a lot of swing voters with 16% undecided and not wanting to commit themselves.

The poll suggests that the Swiss gold initiative remains tightly in the balance and may be much closer than is commonly expected.

Swiss Gold Reserves

Some have suggested that as this was an online poll, caution may be needed as the 13,397 people polled are likely to be more digital savvy and younger. However, it is still believed to give a good barometer of sentiment just five weeks before the poll and before there has been concerted campaigning by either side.

20 Minuten is distributed to commuters at over 150 train stations across the country. Since September 2004, the German language edition has been the most widely read daily newspaper in Switzerland, surpassing Blick. The audited distribution in 2004 was 329,242 (WEMF AG) and it had a readership of an estimated 782,000 according to Wikipedia.

The three key measures of the “Save Our Swiss Gold” initiative are the following:

* an increase in gold holdings of the SNB to reflect an allocation of 20% of total reserves (today gold accounts for 7.7% of total reserves)
* and a moratorium on the sale of Swiss gold reserves
?* the repatriation of Swiss gold reserves – some of which are believed to be in the UK and Canada

See Essential Guide To Gold Bullion Storage In Switzerland

 

GOLDCORE MARKET UPDATE
Today’s AM fix was USD 1,251.75, EUR 978.85 and GBP 774.17 per ounce.
Yesterday’s AM fix was USD 1,241.00, EUR 972.65 and GBP 769.71 per ounce.
    
Gold climbed $8.30 or 0.67% to $1,246.10 per ounce. Silver rose $0.16 or 0.93% to $17.44 per ounce yesterday. 

Gold in U.S. Dollars – YTD, 2014 (Thomson Reuters)

Gold in Singapore rose above $1,250/oz, after rising 0.7%  in the previous session, prior to capping once London opened. At the open in London, gold soared to the highest in over five weeks as the greenback pulled back.

Gold for immediate delivery rose 0.4% t to $1,251.63 an ounce by 9:46 a.m. in London, according to Bloomberg generic pricing. It hit $1,253.85, the highest since September 10. Gold for December delivery gained 0.6% to $1,251.60 on the Comex in New York.

The dollar dropped for a second day, reaching the lowest level in nearly a week. 

Markets are adjusting estimates back for when the U.S. Federal Reserve may raise interest rates. 

Futures traders put the odds of a U.S. rate increase at 46% by October 2015, down from 50% at the end of last week. 

Despite very robust global demand, particularly from China and India, gold ETF holdings fell to a five-year low yesterday.

There are a number of gold friendly factors supporting prices including geopolitical and economic uncertainty and still dovish Fed and other central bank policies.

Get Breaking News and Updates on the Gold Market Here

We previously covered this the Swiss gold initiative here and here

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