Tag: news

With Argentina suddenly no longer able to kick the can any longer in its decade long fight with holdout investors, and warning that unless the covenants of the foreign law bonds are stripped in effect making them local-law bonds (and undergoing an event of default for CDS purposes), everyone is focusing on how soon until the sovereign default parade will again resume, following the Greek technical bankruptcy two years ago. Yet the next sovereign restructuring may not come from Argentina first, but from the Ukraine, which as Reuters reports is holding talks with creditors on the restructuring of its foreign debt. Unfortunately for the country, this attempt at a “voluntary” restructuring is coming at the worst possible time.

From Reuters:

Ukraine is holding talks with creditors on restructuring its foreign currency debts, an official from an international finance association said on Thursday following recent meetings with Ukrainian officials.

 

Lubomir Mitov, an economist with the Institute of International Finance, said that while Ukraine’s finances were precarious, it was too soon to say whether it would need to change the terms of its debt.

 

Mitov said Ukrainian officials stressed they would avoid forcing any so-called haircuts on bondholders in a restructuring.

Taking a page from the Greek playbook, Ukraine is fixated on making it quite clear that creditors would be, make that should be, unanimous in agreening to a restructuring. Which is clear: as the endless days of Greek bondholder negotiations taught us, the inability to have the vast majority of holders agree on a change in bond terms, i.e., a restructuring, would mean an event of default.

“The Ukrainians authorities made very clear to us that they would consider this only as a really, truly voluntary operation agreed by the bondholders,” Mitov told journalists by phone. “A voluntary exchange or maturity extension could be one of the sources for financing.”

Basically, the only question is whether the restructuring of insolvent Ukraine which has lost its industrial eastern regions to “separatists” and is no longer capable of servicing its existing debt, takes place during a sovereign default or without one, allowing the country to seamless continue its existence as if it was the country that issued the original bond, under the original conditions (hint: it isn’t).

Alas, this attempt to renegotiate its bonds comes at the worst possible time because just this week the US Supreme Court gave a green light to “voluntary” exchange offer holdouts everywhere to demand priority treatment when holding out from to such “enforced” exchange offers as what Argentina did back then… and what Ukraine is trying to do now.

So absent some major “carrot”, most likely coming from Uncle Sam, we wouldn’t be surprised if Ukraine was unable to find even a simple majority of participants that would agree to the terms of its exchange offer.

Which leads to another question: which will be the fulcrum Ukraine security, and who will be the vulture investors – here the usual suspect Elliott comes to mind – preparing to “hold out” and scuttle the deal, demanding a pound of flesh in exchange for not holding out.

For now the answer is unclear, which is why once the Reuters news hit, Ukraine bonds tumbled:

But what will make the Ukraine restructuring fascinating is if the “activist” bondholder investors, aka vultures, aka holdouts, are not your usual hedge funds, but none other than the Kremlin, which after accumulating a sufficient stake to scuttle any prenegotiated, voluntary transaction can demand virtually anything from Kiev in order to allow the country to make the required adjustments on its bonds to avoid an outright sovereign default.

Because who else can’t wait for Putin Capital Management LP?

via Zero Hedge http://ift.tt/UQWHxh Tyler Durden

Gold has surged over $41 and silver over 70 cents to over $1,314 and $20.46 per ounce or 3% and 4.2% respectively.

Gold and silver have surged and added to overnight gains as geopolitical risk raised its ugly head once again. The situaiton in Iraq has deteriorated leading to deepening tensions in the region and oil prices steadily marching higher. There are also concerns that the Chinese commodities collateral fraud could lead to a scramble for physical metals – both base and precious.

Stocks and the dollar have weakened after the U.S. Federal Reserve confirmed ultra loose monetary policies are set to continue due to slowing economic growth and despite inflation pressures building. The Fed cut its U.S. growth forecast for 2014 from 2.9% to a range of between 2.1% and 2.3%.

Oil prices rose again today and remain near multi month highs on concerns of supply disruption. The violence gripping energy producer Iraq continued to create supply fears, with global crude pushing higher after hitting a nine-month high.  Army troops and Islamic militants battled for control of Iraq’s largest oil refinery, which by late Wednesday remained in government hands.

However, this morning AP reports that ISIS militants are flying their black flag over the Iraqi Baiji refinery. Tensions over Iraq and Ukraine are attracting some safe haven bids for gold.

Platinum and palladium rose as new hurdles emerged in settling South Africa’s industrial unrest and doubts remain about the viability of Russian supplies.

The smart money continues to dollar cost average into gold and is getting into position. The half year and full year weakness we saw in 2013 may be seen again and create a buying opportunity for bullion buyers.

?Bullion Coin And Bar Global Price Match Guarantee

Faber Advises 25% Allocation To Gold And Says “Media Doesn’t Like Gold”
Dr Marc Faber told CNBC in an interview yesterday that the “media does not like gold.” Dr Faber, the author of the Gloom Boom Doom Report sought to explain gold’s poor price action recently and suggested it is due to poor sentiment and the fact that “the media doesn’t like gold.”

“Investors should have some exposure to gold” and Dr Faber has been adding recently as gold (and gold stocks) are so much cheaper than “over-inflated stocks”.

“I have an exposure of approximately 25%, and just recently when it dropped, I bought some more,” he said. “Nothing is particularly cheap, [but] gold is relatively cheap compared to equities at the present time.”



Faber holds around 25% of his assets in gold because he believes we have a “colossal asset inflation” and eventually the monetary policies of central banks will lead to a further loss of purchasing power in the value of paper money.

When asked by the CNBC anchor why investors are shunning gold, Faber suggested one reason is  “because the media doesn’t like gold, nobody at CNBC owns gold. Nobody at Bloomberg owns gold. Gold is being constantly talked down by the media, and Fed officials, and economists, who also don’t own any gold. They’re all stocked up in equities.”

This is an interesting point as we know from conversations with financial journalists in London that many of them are actually banned from owning gold by their employers as it would create a “conflict of interest.” Bizarrely, at the same time they are allowed to own other asset classes such as stocks and bonds and can have cash deposit accounts.

Therefore, there is the possibility that there is a cognitive bias towards certain asset classes and against other asset classes amongst journalists. This is unfair to gold and indeed to the journalists in question as it means that they cannot own a properly diversified portfolio.

It was funny that in the CNBC coverage of the interview, the producer confirmed Dr Faber’s assertion and disclosed at the bottom of the piece that he does not own any gold:

“Disclosure: The writer of this article indeed does not own any gold.

—By CNBC’s Alex Rosenberg”

Dr Faber, pointed out the bias against gold in the very language used to describe gold proponents. “When people talk about people who are optimistic about gold, they call them ‘gold bugs.’ A bug is an insect. I don’t call equity bulls ‘cockroaches.’ Do you understand? There is already a negative connotation with the expression of ‘gold bug.'”

The somewhat pejorative language used regarding those who advocate owning gold is another very interesting point and one we have pointed out before. People who are bullish on stocks or the dollar are not called stock ‘bug’s or paper ‘bugs’ rather they are stock bulls and dollar bulls.

Faber recently told GoldCore in a webinar how he will “never sell his gold”, he buys “more every month” and believes storing gold in Singapore “is safest”.

via Zero Hedge http://ift.tt/1qwcG0u GoldCore

Gold has been flashing red this morning that something is happening. Bonds started to crack and then the 30Y TIPS auction tailed… and bond yields are smashing higher. And now stocks are being sold on heavy volume as VIX rolls over… what did Janet say to do now? We need another press conference…

PMs flashing red…

 

Bonds catching up…

 

 

And stocks not listening to Yellen…

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

Gold has been flashing red this morning that something is happening. Bonds started to crack and then the 30Y TIPS auction tailed… and bond yields are smashing higher. And now stocks are being sold on heavy volume as VIX rolls over… what did Janet say to do now? We need another press conference…

PMs flashing red…

 

Bonds catching up…

 

 

And stocks not listening to Yellen…

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

An interesting chart to look at, is the CLMI vs the SPX. If you are not familiar with it, the Capital Link Maritime Index (CLMI) is a composite index of all US listed shipping stocks. 

 

 

 

 

h/t @noalpha_allbeta

via Zero Hedge http://ift.tt/UhJjS6 StalingradandPoorski

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via Zero Hedge http://ift.tt/1lKry3q williambanzai7

Forget the 700-plus-page Piketty 'socialism for all' tome; here is economics that everyone can understand.

Click image for link to website

And here they are… the 5 things they don't tell you about economics…

1. 95% of economics is common sense

You don’t need a degree to understand it

 

We’ve got this profession wrong; a lot of professional economists think what they do is too difficult for ordinary people. You’d be surprised how often these people are stupid enough to say things, at least in private, like ‘you wouldn’t understand what I do even if I explained it to you’. If you cannot explain it to other people, you have the problem.

 

People express strong opinions on all sorts of things despite not having the appropriate expertise: climate change, gay marriage, the Iraq War, nuclear power stations. But when it comes to economic issues, many people are not even interested, not to speak of not having a strong opinion about them. When was the last time you had a debate on the future of the Euro, inequality in China or the American manufacturing industry, despite the fact that these issues can have a huge impact on your life, wherever you live?

 

2. Economics is not a science

Despite what the experts want you to believe, there is more than one way of ‘doing’ economics

 

People have been led to believe that, like physics or chemistry, economics is a ‘science’, in which there is only one correct answer to everything; thus non-experts should simply accept the ‘professional consensus’ and stop thinking about it.

 

Contrary to what most economists would have you believe, there isn’t just one kind of economics – Neoclassical economics. In fact there are no less than nine different kinds, or schools, as they are often known. And none of these schools can claim superiority over others and still less monopoly over truth.

 

I accept that being suddenly asked to taste nine different flavours of ice cream when you had thought that there was only one plain vanilla can be quite overwhelming. In order to help, I attach here a simple table that will help you overcome your initial fear.

 

3. Economics is politics

Economic arguments are often justification for what politicians want to do anyway

 

Economics is a political argument. It is not – and can never be – a science.

 

Behind every economic policy and corporate action that affect our lives – the minimum wage, outsourcing, social security, food safety, pensions and whatnot – lies some economic theory that either has inspired those actions or, more frequently, is providing justification of what those in power want to do anyway.

 

Only when we know that there are different economic theories will we be able to tell those in power that they are wrong to tell us that ‘there is no alternative’ (TINA), as Margaret Thatcher once infamously put it in defence of her controversial policies.

 

4. Never trust an economist

It is one thing not to foresee the financial crisis; it’s another not to have changed anything since

 

Most economists were caught completely by surprise by the 2008 global financial crisis. Not only that, they have not been able to come up with decent solutions to the ongoing aftermaths of that crisis.

 

Given all this, economics seems to suffer from a serious case of megalomania.

 

The financial crisis has been a brutal reminder that we cannot leave our economy to professional economists and other ‘technocrats’. We should all get involved in its management – as active economic citizens.

 

5. We have to reclaim economics for the people

It’s too important to be left to the experts alone

 

You should be willing to challenge professional economists (and, yes, that includes me). They do not have a monopoly over the truth, even when it comes to economic matters.

 

Like many other things in life – learning to ride a bicycle, learning a new language, or learning to use your new tablet computer – being an active economic citizen gets easier over time, once you overcome the initial difficulties and keep practicing it.

 

Unless you are willing and able to challenge the professionals, challenge the experts, what’s the point of having a democracy?

 

There is no excuse for complacency. If you organize and demand reforms then a lot of amazing things happen, but it won’t come easy – we have to fight for it.

And there it is – all you need to know when watching the talking head bloviation and justification day after day…

Source: Penguin Group (buy here)

via Zero Hedge http://ift.tt/UhJiO6 Tyler Durden

Forget the 700-plus-page Piketty 'socialism for all' tome; here is economics that everyone can understand.

Click image for link to website

And here they are… the 5 things they don't tell you about economics…

1. 95% of economics is common sense

You don’t need a degree to understand it

 

We’ve got this profession wrong; a lot of professional economists think what they do is too difficult for ordinary people. You’d be surprised how often these people are stupid enough to say things, at least in private, like ‘you wouldn’t understand what I do even if I explained it to you’. If you cannot explain it to other people, you have the problem.

 

People express strong opinions on all sorts of things despite not having the appropriate expertise: climate change, gay marriage, the Iraq War, nuclear power stations. But when it comes to economic issues, many people are not even interested, not to speak of not having a strong opinion about them. When was the last time you had a debate on the future of the Euro, inequality in China or the American manufacturing industry, despite the fact that these issues can have a huge impact on your life, wherever you live?

 

2. Economics is not a science

Despite what the experts want you to believe, there is more than one way of ‘doing’ economics

 

People have been led to believe that, like physics or chemistry, economics is a ‘science’, in which there is only one correct answer to everything; thus non-experts should simply accept the ‘professional consensus’ and stop thinking about it.

 

Contrary to what most economists would have you believe, there isn’t just one kind of economics – Neoclassical economics. In fact there are no less than nine different kinds, or schools, as they are often known. And none of these schools can claim superiority over others and still less monopoly over truth.

 

I accept that being suddenly asked to taste nine different flavours of ice cream when you had thought that there was only one plain vanilla can be quite overwhelming. In order to help, I attach here a simple table that will help you overcome your initial fear.

 

3. Economics is politics

Economic arguments are often justification for what politicians want to do anyway

 

Economics is a political argument. It is not – and can never be – a science.

 

Behind every economic policy and corporate action that affect our lives – the minimum wage, outsourcing, social security, food safety, pensions and whatnot – lies some economic theory that either has inspired those actions or, more frequently, is providing justification of what those in power want to do anyway.

 

Only when we know that there are different economic theories will we be able to tell those in power that they are wrong to tell us that ‘there is no alternative’ (TINA), as Margaret Thatcher once infamously put it in defence of her controversial policies.

 

4. Never trust an economist

It is one thing not to foresee the financial crisis; it’s another not to have changed anything since

 

Most economists were caught completely by surprise by the 2008 global financial crisis. Not only that, they have not been able to come up with decent solutions to the ongoing aftermaths of that crisis.

 

Given all this, economics seems to suffer from a serious case of megalomania.

 

The financial crisis has been a brutal reminder that we cannot leave our economy to professional economists and other ‘technocrats’. We should all get involved in its management – as active economic citizens.

 

5. We have to reclaim economics for the people

It’s too important to be left to the experts alone

 

You should be willing to challenge professional economists (and, yes, that includes me). They do not have a monopoly over the truth, even when it comes to economic matters.

 

Like many other things in life – learning to ride a bicycle, learning a new language, or learning to use your new tablet computer – being an active economic citizen gets easier over time, once you overcome the initial difficulties and keep practicing it.

 

Unless you are willing and able to challenge the professionals, challenge the experts, what’s the point of having a democracy?

 

There is no excuse for complacency. If you organize and demand reforms then a lot of amazing things happen, but it won’t come easy – we have to fight for it.

And there it is – all you need to know when watching the talking head bloviation and justification day after day…

Source: Penguin Group (buy here)

via Zero Hedge http://ift.tt/UhJiO6 Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

What’s a crony status quo to do when it is ultimately confronted with an unruly mob of plebs frustrated with the fact median wages haven’t increased in forty five years, while the 0.01% has stolen everything in sight with the help of the Federal Reserve and corrupt Washington D.C. politicians?

Well, naturally you’d launch the South African made Skunk Riot Control Copter, fully equipped with a suite of high-definition and thermal imagine cameras, strobe lights, speakers and a pepper spray firing paint ball gun which can fire 80 shots per second!

We learn from The Verge that:

Crowds of protesters could soon come under attack from riot control drones outfitted with paintball guns, strobe lights, and speakers. The Skunk Riot Control Copter, built by South African company Desert Wolf, has a suite of cameras and four paintball guns strapped to its chassis to help its operators monitor and control unruly crowds. The guns can fire ammunition from four different hoppers, meaning the drone operators can shoot protesters with dye markers, solid plastic pellets, or small capsules of pepper spray.

 

The first batch of drones will reportedly be deployed to mines in South Africa later this month, where lengthy strikes at some of the country’s biggest facilities have resulted in violence. Mine owners hope that the drones will be able to control and subdue their workers by blasting them with flashing lights, blaring messages of control, and shooting them from the sky. Kieser says he hopes its success in the country will lead to more orders for the gun-toting drone.

Oh you silly little miners want higher wages? You may want to think twice about going on strike, unless you want a couple pepper spray pellets to the dome.

Sky News adds that:

The drone has a payload capacity of around 40kg; it can carry up to 4,000 projectiles and fires up to 80 shots each second.

 

The eight-rotor aircraft also has high-definition and thermal imaging cameras.

 

It needs two people to control it; one to maneuver the aircraft, and one to control the array of tools and weapons on board.

 

Complete with a ground control station, it will cost around 500,000 South African Rand (£27,400).

 

A spokesman for Desert Wolf said more orders were in the pipeline from customers around the world.

 

These include security companies, police units and businesses.

Only two people needed to control it. Just imagine how many protesting slaves you can blast at one time. So efficient! Unfortunately, for pepper spray happy cops like John Pike, who received a $38,000 settlement for pepper spraying seated, peaceful protesters at the University of California Davis, the easy money may be gone. Yes, this guy:

My only question at this point is; can drones collect pensions?

via Zero Hedge http://ift.tt/UhJih0 Tyler Durden