For the 3rd month in a row, US Factory Orders missed expectations with a major downward revision to December's data (-2%) and has fallen two months in a row. Inventories continue to rise - up nine of the last ten months to the highest level since records began. Better just hope for all that pent-up demand to flood back or we have a problem.
So the remaining Au left to settle for the Jan and Feb contract disappears in the March 3rd report. What's up with that? Am I missing something here?
We had 20.19 tonnes of gold standing for the December contract month and.4914 tonnes for January 2014. and now for February I will add that to the total, 11.91 tonnes standing. Therefore 14.3084 tonnes is left to be settled upon (20.19 tonnes + 0.4914 + 11.91 - 18.326 tonnes= 14.265 tonnes).
Thus from the big 3 of JPMorgan, HSBC and Scotia we have a dealer inventory of only 16.319 tonnes which must settle upon the 14.265 tonnes still outstanding.
Since JPMorgan has stopped 97% of all issuance, if you remove them from the big three, then we have HSBC and Scotia having an inventory of only 9.654 tonnes of gold which must settle upon 14.265 tonnes of gold still outstanding.
I tried to comment on harveys website but I can't seem to get disque to display correctly on my computer
I tried to open Harvey's site today and received:
Maybe Harvey's site was down but this is a new one for me. If anyone has an answer, I would really appreciate some direction. Seems like I'm going backwards. Nothing wrong with my computer just Harvey's website. Anyone else having the same problem? I don't even have chrome on this computer.
I don't really care about reading Harvey's website coz Daystar does such a good job of posting Harvey's content+. But I would really like to know what happened to the outstanding Au to be settled from Jan and Feb. Thanks in advance.
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
Why is our government so incompetent? Short answer: because incompetence has been fully institutionalized in every branch, every agency and every nook and cranny of the state.
Though many may reckon the U.S. government (and its Deep State) are not so much incompetent as merely evil, I suggest incompetence sows the seeds of evil consequences.
It's easy to lay the responsibility for the state's incompetence on its staggering size and complexity, and there is much truth in the notion that no system of this scale and complexity can possibly be governable or accountable.
But I think we owe it to ourselves to dig a bit deeper than this to understand why our visible government (executive, Congress, regulatory agencies, the Federal Reserve, etc.) and the Deep State (everything that's decided and run behind closed doors) is so monumentally incompetent.
The policies and decisions of the past 15 years can be reduced to three catastrophic blunders: the discretionary war in Iraq and "nation-building" in Afghanistan; allowing those responsible for the 2008 financial meltdown to become even more invulnerable and predatory, i.e. enabling a "too big to fail" banking sector, and Obamacare, the Orwellian-named Affordable Care Act (ACA).
Each of these policy decisions has been enormously destructive to the nation, and the opportunities lost in their wake are irreversible.
I have covered the systemic reasons for incompetence and failure many times.These boil down to the accumulating sclerosis of bureaucracy and the ratchet effect.
I have addressed The Lifecycle of Bureaucracy on a number of occasions:
When Escape from a Previously Successful Model Is Impossible (November 29, 2012)
Complexity: Bureaucratic (Death Spiral) and Self-Organizing (Sustainable) (February 17, 2011)
The ratchet effect can also be visualized as a rising wedge, in which costs and inefficiencies continue rising until any slight decrease in funding collapses the organization.
Dislocations Ahead: The Ratchet Effect, Stick-Slip and QE3 (February 14, 2011)
The Ratchet Effect: Fiefdom Bloat and Resistance to Declining Incomes (August 23, 2010)
I think we can add a few other factors:
1. That which is cheap and abundant will be squandered until it is no longer cheap or abundant. Our default programming is to squander what is easily available and abundant. This is true not just of resources such as food and energy but of health, trust, power and all sorts of other intangibles.
For example, when the Soviet Union collapsed, the U.S. was left with an abundance of soft and hard power on the global stage. The natural response was to squander it on misadventures instead of investing it wisely.
When we're young and healthy, we squander this reservoir of vitality rather than invest it wisely in habits that will maintain our health as we age.
There are countless examples of this dynamic. The irony of this dynamic is tragic: by the time we realize we've squandered an irreplaceable resource, it's too late.
2. The prime directive of any bureaucracy is to eliminate all accountability. The raison d'etre of bureaucracy, the very reason for its existence, is not to manage complex affairs but to dissipate accountability into a formless cloud so that no member of the bureaucracy will ever face any consequences for his/her actions.
In other words, the prime directive of any bureaucracy is to enforce the perfection of moral hazard, i.e. those making decisions suffer no consequences when the decisions are disastrous.
The entire structure of a bureaucracy boils down to this: we followed the rules, and therefore we are blameless.
Obamacare and the Pentagon are both perfections of this purposeful loss of accountability. I recently saw a video clip of a journalist who had asked 12 different government functionaries who was in charge of implementing the Obamacare website before its flawed launch and he'd received 12 different answers.
In other words, accountability had already been extinguished well before the site was even launched.
3. Bureaucracies are intrinsically prone to group-think. The more closed the bureaucracy, the greater this tendency to eliminate skeptics, heretics, independent thinkers, etc.: Who Gets Thrown Under the Bus in the Next Financial Crisis? (March 3, 2014).
The foundational group-think concepts behind each of the three policy disasters listed above have all been discredited, but only after group-think insured the destruction of vital national interests: for example, the neo-conservative "failed-state" concept that guided a decade of foreign policy misadventures: The Rise and Fall of the Failed-State Paradigm: Requiem for a Decade of Distraction (Foreign Affairs).
4. As correspondent Lew G. has pointed out, bureaucracies are not designed to be fail-safe; their complexity and lack of accountability lead not to resilience but to fragility and vulnerability.
5. One systems-level consequence of tightly connected, interactive complex systems is that they generate routinely failures known as "normal accidents," catastrophes that result from seemingly small miscalculations and miscues that cascade into systemic crises. When accountability has been lost, there are no feedback loops left to correct these "normal accidents," so the damage piles up within the organization until it collapses in a supernova model of accumulated incompetence.
6. The moral-hazard-riddled leadership of bureaucracies will choose whatever short-term politically expedient fix reduces the immediate political pain (also known as "kicking the can down the road") rather than risk shaking up the organization by imposing accountability and clearing out the deadwood. This dependence on short-term politically expedient "fixes" that ignore the real problems piles up more moral hazard, failed policies, ineffective deadwood and cost, increasing the system's fragility and vulnerability to any shock that cannot be dissolved with another short-term can-kicking "fix."
Why is our government so incompetent? Short answer: because incompetence has been fully institutionalized in every branch, every agency and every nook and cranny of both the visible state and the Deep State.
Source picture: Bloomberg
It appears that the gold fanatics were right the whole time. For at least ten years, the price of gold has been manipulated. The banks are the bad guys once more, who would have thought?!
If you work at a bank and do your job the way you are supposed to, it might be smart regardless to not talk about your professional activities when you are at a party this week. Although there are 'only' 5 banks involved in the scandal this time, the image of the whole sector will suffer again.
The rumor that the gold price was being manipulated had been going around for quite some time and, surprise surprise, it was true! It would be impossible to draw a different conclusion after reading the demolishing report from New York University’s Stern School of Business Professor Rosa Abrantes-Metz and Moody’s Investors Service's Managing Director Albert Metz. The words in the report were carefully chosen, leaving room for interpretation, although no one will be fooled.
If it looks like a duck, quacks like a duck, flies like a duck, well, it is a duck then, isn't it.
Gold price: decades of fixing
The process of gold fixing, which is the setting of the gold price twice each business day, just screams for manipulation, conspiracy and corruption by the banks involved. And the empirical data that was used from 2001 to 2013, shows 'inexplicable price movements' from as far back as 2004 (!) during the midday fix. It probably won't surprise you that those 'inexplicable price movements' most often were downward price movements. In 2010 for example, 92 percent (!) of the large price movements during gold fixing were negative.
Gold fixing is done twice each business day, at 10:30am and 3pm London time during a conference call. It used to be done face to face, but since 2004 it is just a conference call. The fixing in itself is still done, however, and is vulnerable to manipulation. These calls between the five banks that are involved usually last no longer than 10 minutes, but have lasted up to an hour or longer.
The similarities with the fixing of, for example, the Euribor and Libor interest rates are obvious. The damage done by those events is impossible to calculate, but you can take it from us that we are talking about billions of dollars. Regular citizens are often at the receiving end of all this manipulation, as governments and its tax payers are the ones who pick up the bill all too often.
It is still too early to make a sensible estimation of the damage that the manipulation of the gold price has caused. But the story will be the same: fines will be given without any further consequence. The current old-fashioned way of fixing the gold price has seen its days however, as confidence in the process has gone up in smoke. Another method will take its place, probably with greater control and supervision.
We are curious of course, how this whole ordeal will play out. The researchers of the report are calling for a deeper investigation of the matter. They obviously want to pass on this hot potato, which is understandable. Regardless of the above, further investigation is being done in Germany already.
We predict that there will be large fines, lots of accusations and a new method for gold fixing. That, or the investigators will not succeed at producing enough evidence: considering what is at stake here, it is impossible to exclude any scenario. It is hard to surprise us these days. Ultimately, true price discovery will take hold of the gold market. That is nature's law, which can't be fixed by a bunch of bankers.
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I've finalized my keynote for the World War D conference in Melbourne, Australia at the end of the month.
iWar: How anybody can declare war on the world and win
Should be a fun conference.
I've also offered to be in two additional panels on the second day to discuss topics of interest. Should be lots of fun.
From today’s Open Europe news summary:1. Brussels proposes revamped €11bn aid package for Ukraine
2. The European Commission yesterday released its in-depth review into macroeconomic imbalances, in which it called for “policy action” on the German current account surplus, but accepted that steps were being taken. 3. Greece seeking debt guarantees to aid return to market 4. The ECB will hold its monthly meeting today with expectations split over whether the bank will take further action to fight low inflation. Recent stronger data, on inflation and economic activity, may potentially allow the ECB to avoid taking drastic action, according to the WSJ. 5. Discussions between member states and MEPs are at a deadlock over the plans for a banking union and in particular the single bank resolution fund. Negotiations were called off last week but MEPs will present a compromise proposal to member states next week.
Europe is bankrupt, yet it will give eleven billion euros to a country that is not a member of the EU. Germany is criticized for producing goods that people want to buy and is willing to accept ever depreciating pieces of paper (actually ever depreciating TARGET2 credits at the ECB) in return. Greece wants to borrow even more from the credit markets using the rest of Europe as guarantors. The ECB is determined to debase the euro and not allow prices to fall, which would be a blessing to the average European citizen. And, finally, the EU is determined to socialize bank risk continent-wide, which will elevate moral hazard in order to further deplete Europe’s capital base.
The world is turned upside down.
Moments ago, Reuters blasted the following headline:
DECREE MAKING CRIMEA PART OF RUSSIA HAS COME INTO FORCE FROM MOMENT OF ADOPTION; RUSSIAN ARMED FORCES ARE ONLY LEGITIMATE FORCES IN REGION -DEPUTY PRIME MINISTER OF CRIMEA
On the surface, this would mean that the Russian annexation of the Crimea if complete (and East Ukraine is coming). Especially when one considers that earlier Crimea also said it could adopt the Russian rouble as its currency and "nationalise" state property as part of plans to join the Russian Federation, a regional official was quoted as saying on Thursday.
The only problem as we reported earlier is that Kiev opened a criminal investigation against Crimean Prime Minister Sergei Askyonov, who was appointed by the region's parliament last week. The Ukrainian government does not recognise his authority or that of the parliament. In other words, Kiev will not respect the Crimea's popular choice, even if it is fully supported by Putin, which means that a showdown, one in which Russia proclaims it is defending the democracy of the Crimea against the Kiev government, is now almost inevitable.
Meanwhile, RT has decided to already add the region to Russian territory:
Russia Today has already changed their map... pic.twitter.com/wNJ4rWuf7K
— Dave Keating (@DaveKeating) March 6, 2014
Promises, promises. A lack of easing, aside from a promise of "lower for longer", has driven EURUSD back above 1.38 as the market is once again disappointed by Draghi's lack of exuberance.
- *DRAGHI SAYS UNEMPLOYMENT STABILIZING, REMAINS HIGH (umm, continues to rise every month?)
- *DRAGHI SAYS UPSIDE, DOWNSIDE INFLATION RISKS REMAIN LIMITED (umm, continues to plunge every month?)
- *DRAGHI SAYS RISKS TO ECONOMIC OUTLOOK ARE ON DOWNSIDE (umm, stocks are at record highs?)
- *DRAGHI SAYS REAL INCOME SUPPORTED BY LOWER ENERGY PRICES (umm, so no sanctions on Russia then?)
But apart from that, Draghi is "nailing it"...
We are sure a stronger currency will work wonders for the recovery...
Just how cornered is Draghi - well you decide - after these comments...
- *DRAGHI CITES LOW INFLATION, WEAK ECONOMY, SUBDUED CREDIT
- *DRAGHI SAYS ECB EXPECTS RECOVERY TO PROCEED AT A SLOW PACE
So why no "stimulus" - what's he worried about?
Must be the weather... Initial jobless claims swung from the worst in 2014 last week to the best in over 3 months this week, with a 323k print (well below the 336 expectation). No states estimated claims this week but even the Labor Department suggests the series' volatility is "coinciding" with winter storms. Overall claims dropped 8,000 to 2.91 million on the week but it is clear the descending trend is over for this series - which fits with ADP and ISM Services weakness.
From big miss and worst in 2014 to big beat and best in 2014...
Remember when initial claims was heralded as key support for stocks? Not so much anymore
Dismally drifting towards deflation as credit creation is a long and distant thing of the past in the European Union, this morning's decision to hold rates unchanged leaves a lot of "whatever it takes" hope left for the press conference. Whether he will ease lending standards, cut haircuts, enable more securitization, push direct lending (there's no demand!), or "promise" open-ended QE - it's all on the table but we suspect it will be more talk and "whatever" he is doing so far is working... stocks are near record highs and bond yields record lows - which must mean Europe is fixed...
While Janet Yellen fell back on the ubiquitous central banker statement that she "would do all that [she] can" it was Dallas Fed's Richard Fisher who raised the most eyebrows yesterday. In a speech in Mexico City, the central banker said he was concerned about "eye-popping levels" of some stock market metrics warning that the Fed must monitor the signs carefully to ensure bubbles were not forming. While other Fed members have paid lip-service to bubbles, Fisher explicitly discussed stocks in the context of the dot-com boom of the late '90s warning of "the ghost of 'irrational exuberance'" and worried about corporate bonds too.
In his speech in Mexico City, Fisher said some indicators like the price-to-projected forward earnings, price-to-sales ratios and market capitalization as a percentage of GDP, are at levels not seen since the dot-com boom of the late 1990s.
He noted that margin debt is pushing up against all-time records.
"We must monitor these indicators very carefully so as to ensure that the ghost of 'irrational exuberance' does not haunt us again," Fisher said. While a few Fed officials have mentioned unease about stock prices, Fisher's comments are the most pointed to date.
Fisher did not spare the bond market, saying that narrow spreads between corporate and Treasury debt "reflect lower risk premia on top of already abnormally low nominal yields."
Seems like a good reason to BTFTAH to us...
Reprinted from FEE.org
Economic theories don’t lend themselves to laboratory testing, so the work of a national appraisal firm is especially enlightening. A new study lends support to the Austrian business cycle theory, which says that the less government is involved, the faster a market will recover.
Pro Teck Valuation Services has posted a report comparing housing-market rebounds in cities with “non-judicial” foreclosure processes with those with “judicial” ones. In other words, they compare states in which the government meddles less in foreclosure with states that meddle more.
Pro Teck found that of 30 metropolitan housing markets in non-judicial states, housing markets corrected sooner and prices have rebounded more quickly than in states with more government involvement. Could Murray Rothbard have been correct that markets clean up clusters of malinvestment?
Pro Teck chief executive Tom O’Grady told The Los Angeles Times, “When we looked closer” at rebound performances state by state, “we observed that nonjudicial states bottomed out sooner”—typically between 2009 and 2011—”versus 2011 to 2012 for judicial states, and have seen greater appreciation since the bottom,” typically 50 percent to 80 percent compared with just 10 percent to 45 percent for judicial states.
“Our hypothesis,” he added, “is that nonjudicial states have been able to work through the foreclosure [glut] faster, allowing them to get back into a non-distressed housing market sooner, and are therefore seeing greater appreciation.”
In October, the top 10 metro areas Pro Teck studies were in non-judicial California. At the bottom were cities in Illinois and Florida, both judicial states. “Unlike California, which tore off the foreclosure Band-Aid quickly, Florida and Illinois have been slowly peeling it away,” the Pro Teck authors explain. “In these states there are still high ratios of foreclosure sales and hefty foreclosure discounts, which in turn are limiting any real recovery. Because of this, all of our bottom ten metros are in Florida or Illinois.”
The top 10 metro areas had less than four months of inventory for sale and averaged more than 20 percent year-over-year appreciation. A key statistic in Pro Teck’s analysis is the ratio of foreclosure sales to total sales. In all of these markets it was under 10 percent. In the view of Pro Teck’s experts, “Supply-demand market fundamentals have returned, which should lead to a sustainable recovery.”
In slow-moving judicial states, foreclosures are still 25 to 50 percent of sales, and unsold inventory remains high, at a five- to 10-month supply.
In the same vein that judges believe they facilitate orderly housing markets in judicial states, Ph.D.s and bureaucrats believe problems with the economy (inadequate aggregate demand) can be fixed with the proper committee-determined interest rate and the use of government force to keep businesses alive or keep certain prices in place.
The Austrian school is unique in recognizing that the real problem is the unsustainable boom. The eventual bust is really the economy’s required healing. Central bank interest-rate manipulation directs capital into high-order capital goods. These low interest rates make these projects appear economically sound, when in fact these projects are malinvestments.
The “cluster of entrepreneurial errors,” as Rothbard termed these malinvestments, is the result of central bank credit expansion driving rates below the natural rate of interest that would be set by individual time preferences.
As bad as what central banks and government policies do to incite the boom that creates the malinvestments, they compound the problem by not allowing the market to heal after the bust.
The financial press appears confounded by the continued lackluster recovery. Five years have passed and trillions of government dollars have been spent since the financial crash. Unemployment is still high, as is the use of food stamps. However, keeping assets in the hands of failed managers with a boom-time cost basis is a sure way to prolong the stagnation.
In non-judicial states, home foreclosures proceed without the involvement of the court and the properties are transferred within months. In judicial foreclosure jurisdictions (22 states), post-default proceedings involve court intervention with specific courted-ordered steps that can take up to two and three years to complete.
In non-judicial states requirements to foreclose are established by state statute. When the borrower defaults, the lender sends a default letter and in many states a notice of default is recorded in public records at the same time. There is a prescribed period for the borrower to cure the default. If the default is not paid, a notice of sale is mailed to the borrower, posted in public places, and recorded at the county recorder’s office. After the notice period has expired, a public auction takes place and the property is sold to the highest bidder.
A judicial foreclosure starts with the lender filing a complaint with the court asking for approval to foreclose its lien and take possession of the property as a remedy for non-payment. The borrower is provided notice of the compliant and is permitted to dispute the facts by answering the complaint.
In most cases there is no dispute, but the court must still issue a judgment in favor of the lender or servicer. The court then authorizes a sheriff’s sale and property is sold to the highest bidder. Lenders’ credit bids (usually the amount owed) are typically the highest and the lenders become owners of the property.
A timeline provided by the Mortgage Bankers Association indicates that the average judicial foreclosure process lasts 480 to 700 days, with the homeowner/borrower remaining in the home as many as 400 days.
New York, a judicial state, has the longest foreclosure timeline at 1,049 days. Texas, a non-judicial state, has the shortest timeline of 159 days.
Rothbard pointed out in Man, Economy and State that if the government interferes at all in the cleansing process of the depression, it will only prolong it. “The more these readjustments are delayed,” Rothbard explained, “the longer the depression will have to last, and the longer complete recovery is postponed.”
James Grant pointed out recently in The Wall Street Journal the result of government tinkering with the economy versus letting it be. “The laissez-faire depression of 1920–21 was over and done within 18 months. The federally doctored depression of 1929–33 spanned 43 months.” He went on to write, “America’s economy is too complex to predict, much less to direct from on high.”
On a micro level Pro Teck’s comparison lends support to Austrian theory. Increased government intervention simply prolongs the agony. Less government means a quicker recovery.
Even though 14 out of the surveyed 54 economists expected a rate cut of some sort, and some were even calling for an outright QE any minute now, this time the majority of academics, or 40 of them, were right and the ECB proceeded with no changes to its various interest rates.
From the ECB:
At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.25%, 0.75% and 0.00% respectively.
The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.
Maybe Draghi will announce something more actionable at his press conference at 8:30 am but at this point it appears that the ECB's hand are tied even as the continent continues to drift ever more into deflation.
- Spot the inaccuracies: Stocks rise on Ukraine diplomacy, ECB easing speculation (Reuters)
- Bank of England Extends Record-Low Rates Into a Sixth Year (BBG)
- China's Chaori Solar poised for landmark bond default (Reuters), explained here previously
- EU leaders meet in Brussels to address Ukraine crisis (FT)
- Nine-month-old baby may have been cured of HIV, U.S. scientists say (Reuters)
- China Raises Defense Spending 12.2% for 2014 (WSJ)
- China Stock Index Rises as Developers Jump on Policy Speculation (BBG)
- VTB Cancels New York Forum as U.S. Relations Sour (BBG)
- IBM workers strike in China over terms of Lenovo takeover (FT)
- College Board Redesigns SAT Exam Making Essay Portion Optional (BBG)
Overnight Media Digest
* The Obama administration further postponed a provision of the Affordable Care Act on Wednesday, the latest in a series of changes that have delayed or pared back the health overhaul so much that many of its ambitious goals won't be achieved during its first years in full effect.
* More than 1,600 stockbrokers failed to disclose bankruptcy filings, criminal charges or other red flags in violation of regulations, without regulators noticing, according to a Wall Street Journal analysis.
* A crop of new lenders is jumping into the subprime personal-loan market, wooing consumers with flawed credit who have been neglected since the financial crisis.
* Bank of America Corp on Thursday will start offering a new checking account, capping a four-year effort to boost revenue from its most basic banking product without alienating customers and lawmakers.
* U.S. and European diplomats failed in a frantic, daylong effort to get Russia and Ukraine to begin direct negotiations aimed at ending Moscow's military incursion into the former Soviet state, raising the prospect of a protracted standoff.
* The United Nations special envoy to Crimea was threatened by a group of 15 to 20 men, some armed, who told him to leave Crimea as he was walking out of the Ukrainian naval headquarters in the regional capital on Wednesday, a senior U.N. official said.
* A federal probe into why General Motors Co took nearly 10 years to recall cars with a potentially deadly defect heated up on Wednesday as safety regulators demanded the auto maker answer 107 questions on its handling of a faulty ignition switch.
* Private-equity firm Cerberus Capital Management LP is working to sew up a deal to buy Safeway Inc this week, though its efforts to do so have been complicated by supermarket giant Kroger Co, according to people familiar with the matter.
* The Bank of England suspended a staff member amid an internal probe into whether officials knew about or played a role in manipulation of foreign-exchange markets, sending a global investigation of banks to the top of London's financial hierarchy.
* In the months before Mt. Gox's collapse, the bitcoin exchange was coming under increasing pressure from one of its banks, which complained about an unmanageable volume of money transfers and repeatedly asked the exchange to close its account with the bank, people familiar with the situation say.
* General Electric Co gave Chief Executive Jeffrey Immelt his second base pay raise in the 12 years since he took over, a reward for the company's 2013 performance when its stock rose more than 30 percent.
Diplomatic efforts to counter Russia's takeover of Crimea were in trouble on Wednesday after Kremlin refused to accept the legality of the new Ukrainian government and western allies scrambled to produce a united front on how tough a line to take with Moscow.
A two-decade-old European Union law could force Lloyds Banking Group and Royal Bank of Scotland to shift their legal domicile from Edinburgh to London if Scotland becomes independent.
Exxon Mobil has promised cuts in capital spending and reduced its expectations of future production joining other oil majors like Chevron and Royal Dutch Shell.
A Bank of England employee was suspended and a new investigation launched after allegations that its officials condoned or were aware of market manipulation embroiling the bank into an escalating foreign exchange scandal.
Barclays decision to pay higher bonuses despite falling profits has some shareholders calling for a management shake-up at the top of its investment banking division, even as the group faces an escalating political row.
* A national safety agency sent the automaker a list of 107 compulsory questions about a defective ignition switch that has been linked to 13 deaths and the recall of 1.6 million cars.
* In an effort to curb illicit activity, Facebook will delete posts that seek to circumvent gun laws, restrict minors from viewing pages that sell guns and inform potential sellers that private sales could be regulated or prohibited where they live.
* John Travolta's mispronunciation of a name at the Oscars led the website Slate to create a feature to do the same with anyone's name - the kind of an interactive game now driving Web traffic.
* Three former top executives of Dewey & LeBoeuf, the giant law firm that filed for bankruptcy protection in 2012, are expected to be charged with misleading other lawyers and lenders about the financial health of the firm.
* In a post on LinkedIn, Reid Hoffman criticized Carl Icahn's campaign against eBay, arguing that the assault is rooted in short-term thinking that runs counter to Silicon Valley's focus on long-term growth.
* The private equity giant Kohlberg Kravis Roberts is making a bigger push into the North American energy business.
* While Paul Tudor Jones II can still claim long-term annual returns of close to 19.5 percent in his $10.3 billion flagship fund, Tudor BVI Global, it has been 11 years since he last hit that level.
THE GLOBE AND MAIL
* Alberta's opposition parties criticized Premier Alison Redford over travel expenses, including her international trips, for the second day in a row of a new legislature session.
* If the early signals are correct, the Fraser River could have the biggest salmon run in British Columbia history this summer, with up to 72 million sockeye returning.
Reports in the business section:
* Chrysler Group LLC walked away from talks with the federal and Ontario governments after they asked how much of its proposed C$3.6 billion ($3.25 billion) investment would be spent in Ontario - a request that was likely to draw out negotiations and delay the company's effort to bring a new minivan to market.
* Cisco Systems Inc said on Wednesday that it has chosen Toronto as one of its four new global innovation hubs, a C$100 million ($90.40 million) investment. The move, which follows a December announcement by the Ontario government that it will give financial support to help the company expand, adds to a sense of momentum around the province's tech sector.
* Joaquin Roberto Meza Delgado, a former senior diplomat for El Salvador who fought for years to stay in Canada after being accused of embezzling diplomatic funds meant for his country's consulate in Vancouver, has been returned to his homeland where he was promptly arrested at the airport.
* An analyst at Canada's anti-terrorism financing agency was stripped of her security clearance and position after she acknowledged meeting Russian diplomats at social events in Ottawa, according to court documents released Wednesday.
* The pundits have been calling for a housing correction in Canada for two years now, but somehow prices and sales, especially in the country's big cities, keep defying gravity. A poll out Wednesday found that 34 percent of Canadians surveyed are willing to enter a bidding war and fight it out to secure a property, 21 percent more than a year ago.
* Canada's insistence that tomato juice be extracted from "sound, ripe, whole" tomatoes instead of paste - a higher standard than in the U.S. - has partially saved an H.J. Heinz Co plant marked for closing by Warren Buffett's private-equity partner.
CHINA SECURITIES JOURNAL
- China supports development of insurance products for online retail sales, said Xiang Junbo, the chairman of China Insurance Regulatory Commission, adding that the launch of regulations "will not be too slow".
- China has earmarked 10 billion yuan ($1.63 billion) to fight air pollution in the first half of this year, said Zhou Shenxian, Minister of Environment Protection.
SHANGHAI SECURITIES NEWS
- China is on track to meet its target to slash overcapacity in bloated industries by 2014, said an official from the Ministry of Industry and Information Technology, adding that the ministry has stepped up efforts to ensure companies with outdated capacity are shut. Beijing has said it will eliminate 27 million tonnes of steel, 420 million tonnes of cement and 350 million tonnes of flat-glass production capacity this year.
21st CENTURY BUSINESS HERALD
- Yu E Bao, a money-market fund promoted by Alipay, may promote a substantial increase in social financing costs, said Ma Weihua, member of the national committee of CPPCC and former president of China Merchants Bank.
- China's top economic planning agency, the National Development and Reform Commission, will launch a self-imposed reform that will reduce its own power as part of the central government's campaign to give the market play a greater role, Chairman Xu Shaoshi said.
ROLLS-ROYCE INVESTIGATED IN US OVER BRIBERY CLAIMS
Rolls-Royce is being investigated by the U.S. Department of Justice, following allegations that its executives bribed officials in Indonesia, China and India in order to win lucrative contracts.
BARCLAYS AND LLOYDS SIDESTEP EU RULES AND HAND BOSSES ALMOST £1M IN SHARES
Bailed-out Lloyds Banking Group and Barclays have handed their bosses almost 1 million pounds ($1.67 million) in shares to sidestep the new rules from Brussels which are intended to clamp down on bankers' pay.
HIRINGS HIT 16-YEAR HIGH ON STRONG GROWTH DATA
British companies hired staff at the fastest rate in 16 years in February, as growth in orders and broader economic recovery fuelled confidence.
GOVERNOR TO FACE MPS OVER BANK'S ROLE IN FOREX SCANDAL
Mark Carney has been called before MPs to respond to allegations that the Bank of England turned a blind eye to traders who were rigging the multi- trillion-dollar currency markets.
BARCLAYS PUTS HUNDREDS OF BANKERS IN THE £1M CLUB
Barclays handed eight of its high-rolling investment bankers pay and bonuses of more than £5 million each last year in the latest sign that largesse in the financial sector is alive and well.
STANDARD CHARTERED TO SLASH PETER SANDS' BONUS AFTER PROFITS DECLINE FOR THE FIRST IN A DECADE
Emerging markets bank Standard Chartered saw profits drop for the first time in a decade last year and its chief executive Peter Sands is taking a 21 per cent cut in his annual bonus.
AO SUPPLIERS 'FURIOUS' AFTER WHITE GOODS FIRM RAISES CONCERNS OVER DIXONS TERMS
Online white goods firm AO has written to suppliers asking them to clarify whether Dixons get better terms than they do, The Independent understands.
Fly On The Wall 7:00 AM Market Snapshot
Domestic economic reports scheduled for today include:
Jobless claims for week of Mar. 1 at 8:30--consensus 338K
Unit labor costs for Q4 at 8:30--consensus -0.5%
Nonfarm productivity for Q4 at 8:30--consensus 2.4%
Factory orders for January at 10:00--consensus -0.5%
Allegiant Travel (ALGT) upgraded to Outperform from Market Perform at Raymond James
Axiall (AXLL) upgraded to Buy from Neutral at Goldman
Biogen (BIIB) upgraded to Outperform from Market Perform at BMO Capital
Bob Evans (BOBE) upgraded to Buy from Hold at Miller Tabak
Cabot Oil & Gas (COG) upgraded to Buy from Neutral at UBS
H&E Equipment (HEES) upgraded to Buy from Neutral at UBS
Hawaiian Holdings (HA) upgraded to Buy from Hold at Deutsche Bank
Inphi (IPHI) upgraded to Buy from Hold at Jefferies
Kirkland's (KIRK) upgraded to Buy from Hold at KeyBanc
Materion (MTRN) upgraded to Buy from Hold at KeyBanc
Navios Maritime (NM) upgraded to Buy from Hold at Stifel
Northern Tier (NTI) upgraded to Overweight from Equal Weight at Barclays
NuStar Energy (NS) upgraded to Overweight from Neutral at JPMorgan
Star Bulk Carriers (SBLK) upgraded to Buy from Hold at Stifel
Tiffany (TIF) upgraded to Buy from Neutral at Citigroup
Yum! Brands (YUM) upgraded to Outperform from Neutral at RW Baird
Brixmor (BRX) downgraded to Neutral from Buy at UBS
Continental Resources (CLR) downgraded to Neutral from Buy at UBS
Emeritus (ESC) downgraded to Hold from Buy at Deutsche Bank
Hilltop Holdings (HTH) downgraded to Outperform from Strong Buy at Raymond James
MarkWest Energy (MWE) downgraded to Neutral from Overweight at JPMorgan
New York Mortgage (NYMT) downgraded to Hold from Buy at MLV & Co.
OCI Resources (OCIR) downgraded to Neutral from Buy at Goldman
Redwood Trust (RWT) downgraded to Hold from Buy at Jefferies
Southcross Energy Partners (SXE) downgraded to Neutral from Overweight at JPMorgan
Spark Networks (LOV) downgraded to Market Perform from Outperform at William Blair
Alcobra (ADHD) initiated with an Outperform at JMP Securities
Alon USA Partners (ALDW) initiated with an Underweight at Barclays
Amedica (AMDA) initiated with an Outperform at JMP Securities
Ascena Retail (ASNA) initiated with a Positive at Susquehanna
Nordson (NDSN) initiated with a Neutral at RW Baird
Ford (F) reported February China sales up 67% to 73,040 vehicles sold
Staples (SPLS) announced plans plans to close up to 225 stores in North America by end of 2015
Exxon Mobil (XOM) to build halobutyl rubber, hydrocarbon resin plants in Singapore
Biodel (BIOD) announced a commercial manufacturing agreement with Emergent BioSolutions (EBS)
Tekmira Pharmaceuticals' (TKMR) anti-Ebola viral therapeutic received Fast Track designation from the FDA
A study by Sangamo BioSciences (SGMO) showed that treatment with the company's ZFN-modified T-cells provide functional control of HIV without antiretroviral drugs
Stage Stores (SSI) announced the sale of Steele's off-price division to Hilco Global
Logitech (LOGI) announced a $25M share buyback program and introduced a long-term financial model, including annual non-GAAP operating profit margin greater than 10%.
Companies that beat consensus earnings expectations last night and today include:
Descartes Systems (DSGX), Safeguard Scientifics (SFE), SP Plus Corp. (SP), WuXi PharmaTech (WX), Giant Interactive (GA), Zogenix (ZGNX), Synacor (SYNC), Boyd Gaming (BYD), ValueVision (VVTV)
Companies that missed consensus earnings expectations include:
Stage Stores (SSI), Joy Global (JOY), Staples (SPLS), Costco (COST), Carriage Services (CSV), Universal American (UAM), General Communications (GNCMA), TG Therapeutics (TGTX)
Companies that matched consensus earnings expectations include:
Air Transport Services (atsg), Semtech (SMTC), Receptos (RCPT)
Darden (DRI) cancels meeting amid pressure from investors, Reuters reports
eBay (EBAY) CEO John Donahoe says several of its top shareholders agree PayPal should stay put, Reuters reports
Deutsche Telekom (DTEGY) CEO said sees sale of T-Mobile US (TMUS) less likely in near-term, Bloomberg reports
DirecTV (DTV) discussing internet rights deal with Disney (DIS), Reuters reports
IBM (IBM) workers strike in China regarding terms of Lenovo (LNVGY) takeover, FT reports
Michigan AG: Chesapeake (CHK), Encana (ECA) face criminal antitrust charges, Reuters reports
Rolls-Royce (RYCEY) says cooperating with authorities on bribery allegations, FT reports
GM (GM) faces increased government pressure over delayed recall, WSJ reports
Foxconn to land 90M iPhone 6 (AAPL) orders in 2014, DigiTimes reports
Obama administration gives health plans additional two year reprieve (HUM, UNH, HNT, AET, MOH, CNC, AGP, HS, WLP, WCG, CI), WSJ reports
Constellium (CSTM) will offer 12.56M Class A ordinary shares for Apollo affiliate
Cousins Properties (CUZ) files to sell 8.7M shares of common stock
Dara BioSciences (DARA) files to sell 2.17M shares of common stock for holders
iCAD (ICAD) files to sell 2M shares of common stock
Medical Properties Trust (MPW) files to sell 8M shares of common stock
Primero Mining (PPP) announces 31.15M share offering by Goldcorp
Sun Communities (SUI) files to sell 4.2M shares of common stock
Synageva (GEVA) 2M share Secondary priced at $105.75
While the world is convinced that Putin's Tuesday press conference was an admission of blinking to the west, the reality is anything but that, and hours ago Crimea's parliament voted to join Russia on Thursday and its Moscow-backed government set a referendum within 10 days on the decision in what Reuters said is a "a dramatic escalation of the crisis over the Ukrainian Black Sea peninsula." To be sure, the Crimea - which has an ethnic Russian majority - affiliation to Moscow as opposed to Kiev is well-known, yet still the sudden acceleration of moves to bring Crimea formally under Moscow's rule came as European Union leaders gathered for an emergency summit to seek ways to pressure Russia to back down and accept mediation. And now all Putin has to do is sit back and say the people have spoken and without spilling a drop of blood has effectively split the country in two parts, with the entire east of Ukraine, where pro-Russian sentiment also runs high - sure to follow Crimea. Just as we said from the very beginning.
The Crimean parliament voted unanimously "to enter into the Russian Federation with the rights of a subject of the Russian Federation". The vice premier of Crimea, home to Russia's Black Sea military base in Sevastopol, said a referendum on the status would take place on March 16. The announcement, which diplomats said could not have been made without Russian President Vladimir Putin's approval, raised the stakes in the most serious east-west confrontation since the end of the Cold War.
Far from seeking a diplomatic way out, Putin appears to have chosen to create facts on the ground before the West can agree on more than token action against him.
EU leaders had been set to warn but not sanction Russia over its military intervention after Moscow rebuffed Western diplomatic efforts to persuade it to pull forces in Crimea, with a population of about 2 million, back to their bases. It was not immediately clear what impact the Crimean moves would have.
European Commission President Jose Manuel Barroso said in a Twitter message: "We stand by a united and inclusive #Ukraine."
French President Francois Hollande told reporters on arrival at the summit: "There will be the strongest possible pressure on Russia to begin lowering the tension and in the pressure there is, of course, eventual recourse to sanctions."
To be sure, the new Kiev government - which may or may not have killed its own citizens in order to rise to power while blaming the atrocities on Yanukovich as described yesterday - has responded in kind to how Putin views them, and declared the referendum illegal and opened a criminal investigation against Crimean Prime Minister Sergei Askyonov, who was appointed by the region's parliament last week. The Ukrainian government does not recognise his authority or that of the parliament. Still, it is by now far too late for Kiev to enforce its will in Crimea.
In the meantime, and confirming that Putin has all the cards, EU leaders had been set to warn but not sanction Russia over its military intervention in Ukraine after Moscow rebuffed Western diplomatic efforts to persuade it to pull forces in Crimea back to their bases. According to EU sources the leaders gathered in Brussels delayed the discussion on sanctions to Russia to a new meeting in two weeks. As we stated yesterday, due to stern German industrial lobby objection, Europe will never implement full blown sanctions and at best will stick to some optical wristslap which has no real adverse impact on Russia.
But back to the Crimea, where a parliament official said voters will be asked two questions: should Crimea be part of the Russian Federation and should Crimea return to an earlier constitution (1992) that gave the region more autonomy?
"If there weren't constant threats from the current illegal Ukrainian authorities, maybe we would have taken a different path," deputy parliament speaker Sergei Tsekov told reporters outside the parliament building in Crimea's main city of Simferopol.
"I think there was an annexation of Crimea by Ukraine, if we are going to call things by their name. Because of this mood and feeling we took the decision to join Russia. I think we will feel much more comfortable there."
All the while, Europe is engaged in idiotic meetings and summits, spearheaded by John Kerry, who was quick to point out how constructive the meeting has been. Perhaps it would have been more so if Russia had participated:
Russian Foreign Minister Sergei Lavrov refused to meet his new Ukrainian counterpart or to launch a "contact group" to seek a solution to the crisis at talks in Paris on Wednesday despite arm-twisting by U.S. Secretary of State John Kerry and European colleagues. The two men will meet again in Rome on Thursday.
Tension was high in Crimea after a senior United Nations envoy was surrounded by a pro-Russian crowd, threatened and forced to get back on his plane and leave the country on Wednesday.
The EU summit in Brussels seemed unlikely to adopt more than symbolic measures against Europe's biggest gas supplier, because neither industrial powerhouse Germany nor financial centre Britain is keen to start down that road.
The short, informal EU summit will mostly be dedicated to displaying support for Ukraine's new pro-Western government, represented by Prime Minister Arseny Yatseniuk, who will attend even though Kiev is neither an EU member nor a recognised candidate for membership.
After meeting European Parliament President Martin Schulz, Yatseniuk appealed to Russia to respond to mediation efforts.
After a day of high-stakes diplomacy in Paris on Wednesday, Lavrov refused to talk to Ukrainian Foreign Minister Andriy Deshchitsya, whose new government is not recognised by Moscow.
As he left the French Foreign Ministry, Lavrov was asked if he had met his Ukrainian counterpart. "Who is that?" the Russian minister asked.
He stuck to Putin's line - ridiculed by the West - that Moscow does not command the troops without national insignia which have taken control of Crimea, besieging Ukrainian forces, and hence cannot order them back to bases.
Kerry said afterwards he had never expected to get Lavrov and Deshchitsya into the same room right away, but diplomats said France and Germany had tried to achieve that.
Western diplomats said there was still hope that once Lavrov had reported back to Putin, Russia would accept the idea of a "contact group" involving both Moscow and Kiev as well as the United States and European powers to seek a solution.
Keep hoping. In the meantime, with each passing day, Putin consolidates his new territory even as the west dithers, Europe is unable to obtain the bailout loans it has promised Ukraine, and Kerry keeps talking.
Following yesterday's abysmal employment and service data which led to an unchanged close it quite clear that the market has returned to a mode where it ignores all newsflow - at least the bad, which is due to the weather, the good news is due to the recovery - and instead is simply driven by such "fundamental drivers" as the momentum and position of the Yen carry trade. And overnight the USDJPY positively exploded following news that the Japan advisory committee has decided the nation's pension fund, the GPIF, does' t need a domestic bond focus. Implicitly this means that the GPIF will soon be able to purchase stocks like Facebook and Tesla, which is a guaranteed way of generated short-term gains and longer-term total losses for the Japanese pensioners. Of course, when the latter happens, nobody will have been able to foresee it and some scapegoat somewhere will be summarily fired. As for what this means for futures, the drift higher has made SPOOs rise once more and at last check was just below if not at new all time highs on an ongoing barrage of increasingly negative macro news.
Stocks in Europe gapped higher at the open in reaction to positive close by the Nikkei 225 index which as noted benefited from comments by Japan's advisory committee that the GPIF doesn't need domestic bond focus, but gradually moved off the best levels as market participants positioned for a slew of risk events. Nevertheless, financials remained the best performing sector, while health care underperformed and was largely weighed on by German listed Merck following earnings release pre-market. At the same time, Bunds failed to benefit from the looming risk events and after gapping lower at the open, prices remained under selling pressure as further alleviation of fears surrounding Ukraine/Russia encouraged flows into riskier assets.
There was little in terms of tier 1 macroeconomic releases this morning, but both France and Spain successfully tapped capital markets and going forward, apart from digesting monetary policy announcements by the BoE and the ECB, attention will also be on the weekly jobs and US factory orders reports.
Bulletin news summary from RanSquawk and Bloomberg
- Japan's health ministry advisory committee said the GPIF doesn't need domestic bond focus and that there is no need for the fund to focus on passive investments
- All analysts surveyed expect the Monetary Policy Committee to keep the bank rate at 0.50% and the Asset Purchase facility at GBP 375bln, due at 1200GMT/0600CST
- 6 out of the 54 surveyed analysts are calling for a cut in the main ECB refi rate to 15 bps, 8 are calling for a cut to 10bps and the other 40 are expecting rates to stay on hold at 25bps, due at 1245GMT/0645CST
- Treasuries steady, 10Y yields holding near midpoint of range seen over last two days as market awaits tomorrow’s payrolls report, est. 146k, unemployment rate holding at 6.6%.
- Goldman and Deutsche Bank cut payrolls estimates after yesterday’s weaker than forecast ISM Svcs, ADP reports
- EU leaders will consider repercussions for Russia at an emergency meeting today on the Ukraine crisis, after Russia’s foreign minister spurned a U.S. effort to ease tensions in the Crimean peninsula
- China’s Finance Minister Lou Jiwei said growth as low as 7.2% would meet this year’s target of “about” 7.5% as he tried to moderate expectations for an economy at risk from swelling debt
- German factory orders rose 1.2% in January vs. median estimate for 0.9% gain in Bloomberg survey
- ECB meets today, with rate decision due at 7:45am ET, Draghi presser 8:30am; stronger-than-expected output and inflation and rising economic confidence might spare the bank from radical steps such as negative rates 40 out of 54 economists in a Bloomberg News survey expect no change in benchmark rate
- Bank of England also meets today, decision due at 7:00am; expected to keep official rate at 0.50%
- China is beefing up spending on high-tech weapons and upgrading combat readiness as it throws its military weight behind territorial claims that have stirred tensions with Japan and Southeast Asian neighbors
- Sovereign yields higher. EU peripheral spreads narrow. Asian equities higher, Nikkei +1.6%; Shanghai Composite +0.3%. European equity markets, U.S. stock-index futures decline. WTI crude, gold and copper little changed
US Event Calendar
- 8:30am: Initial Jobless Claims, Feb 28, est. 336k (prior 348k); Continuing Claims, Feb. 21 est. 2.970m (prior 2.964m)
- 8:30am: Non-Farm Productivity, 4Q final, est. 2.2% (prior 3.2%); Unit Labor Costs, 4Q final, est. -0.5% (prior -1.6%)
- 9:45am: Bloomberg Consumer Comfort, March 2 (prior -28.6)
- 10:00am: Factory Orders, Jan., est. -0.5% (prior -1.5%)
- 12:00pm: Household Change in Net Worth, 4Q (prior $1.922t) Central Banks
- 7:00am: Bank of England seen holding benchmark rate at 0.50%
- 7:45am: ECB seen holding benchmark interest rate at 0.25%
- 8:30am: ECB’s Draghi holds news conference in Frankfurt
- 8:15am: Fed’s Dudley at Wall St. Journal event in New York
- 1:00pm: Fed’s Plosser speaks in London
- 6:00pm: Fed’s Lockhart speaks in Washington Supply
- 11:00am: Fed to buy $1b-$1.25b in 02/15/2036-02/15/2044 sector
- 11:00am: U.S. to announce plans for following week’s sales of 3Y notes, 10Y notes and 30Y bonds
Japan's health ministry advisory committee said the GPIF doesn't need domestic bond focus and that there is no need for the fund to focus on passive investments. However the panel recommended little change to fund's return target, which should seek 1.7% points return above rate of wage growth vs. the current 1.6%. (BBG)
PBoC conducted a 6th consecutive drain with CNY 43bln via 14-day repos and CNY 50bln via 28-day repos for a total net drain of CNY 70bln this week vs. CNY 160bln drain last week. (RTRS)
EU & UK Headlines
German Factory Orders (Jan) M/M 1.2% vs. Exp. 0.9% (Prev. -0.5%, Rev. -0.2%)
German Factory Orders WDA (Jan) Y/Y 8.4% vs. Exp. 7.5% (Prev. 6.0%, Rev. 6.1%)
Greece is trying to reach Troika deal by Saturday, according to Greek finance Minister Stournaras. (BBG) This follows reports that Greece no longer expects an overall deal by next week, after it asked its international lenders to approve its latest bailout review despite an unresolved dispute over how much new capital its banks need.
French Tresor sold EUR 7.99bln vs. Exp. EUR 8bln in OATs and the Spanish Treasury sold EUR 5.004bln vs. Exp. EUR 5bln in bonds this morning. Of note, peripheral bond yield spreads are seen marginally tighter this morning.
Fed's Fisher (voter, hawk) said Fed policy creating incentives for increasing risk and that QE is distorting financial markets. Fisher also stated there is no clear plan for draining excess bank reserves. (BBG)
Fed's Williams (non-voter, dove) expects first main rate increase around mid-2015 and downgrades 2014 growth outlook to about 2.5% from 3%. (BBG)
Stocks in Europe traded higher since the get-go, with health care underperforming as ongoing alleviation of fears surrounding Ukraine/Russia stand-off, together with less than impressive earnings by Merck, buoyed investor demand for more riskier assets. In terms of other notable equity movers, Deutsche Telekom shares came under pressure after the company said that it will not reach EUR 6bln free cash flow target in 2015.
AUD strength was observed across the board overnight and this morning following the release of better than expected retail sales and higher than expected trade balance reports. At the same time, JPY weakness which ensued overnight following comments by an advisory committee on the GPIF was also evident during the first half of the European trading session.
Analysts at Barclays recommend going tactically short EUR/USD at spot 1.3733 with a tight stop at 1.3825 and a target of 1.3550 as as any unexpected easing by the ECB should prompt a lower EUR.
The EU is to consider repercussions for Russia at an emergency meeting today on the Ukraine crisis, after Russian Foreign Minister Lavrov fended off a US effort to ease tensions in the Crimean peninsula. (BBG)
Crimea parliament votes to join Russia, according to RIA. Of note, Crimea will hold a referendum on the region's status on March 16th, according to RIA.
Sinopec says China may see a 'severe' oil refining overcapacity 'soon'. (China Business News)
Russian offline oil-refining capacity has been revised lower for March, to 672,000 tonnes down from the previous March forecast of 1.37mln tonnes. (BBG)
Strikes at South African platinum mines, ongoing since January 23rd, are set to continue as talks between employers and the AMCU have broken down, with the two parties far apart after six weeks of negotiations. (BBG)
Gold fell $2.36 to $1332.74 in late Asian trade before it rallied back to $1341.79 by early afternoon in New York, but it then fell back off into the close and ended with a gain of just 0.17%. Silver climbed to $21.314 in London, but it then fell back off in late trade and ended with a loss of 0.09%.
Gold traded below its highest level in more than four months as tension between Ukraine and Russia eased leading to traders taking profits on gold.
Palladium, 1994 to March 2014 - (Bloomberg)
Palladium climbed for a fifth day and jumped to an 11 month high. Palladium for June delivery rose 0.7% to $769/oz. Palladium has gained 5.5% during the last five days of the crisis and is up 7.9% year to date. There are real concerns that that any economic sanctions against Russia could disrupt exports of the precious metal from the world‘s largest producer and exacerbate an already tight supply situation.
The risk of supply disruptions from Russia come at a time when the market was already dealing with reduced palladium supply as a result of a nearly six week-old strike in South Africa’s platinum-group-metals mining sector.
According to Bloomberg Industries analysts Kenneth Hoffman & Oliver Nugent, “any sanctions imposed by the EU and the U.S. on the export of Russian palladium group metals would create a serious supply shortage that may be difficult for industries to replace.”
This year will show the third consecutive deficit year in global palladium supply, according to a BI survey of analysts. Russia provided 44% of global palladium supply and 13.6% of platinum last year, according to Johnson Matthey.
According to BI, “a pick up in China's demand for platinum group metals may offset any sanctions imposed on Russia by the U.S. and European Union. An increase of 26% sequentially in platinum imports by China in November suggests that domestic supplies are depleting. Russia has typically provided about 30% of China's palladium imports and China may need to increase imports from the country as labor disputes in South African mines continue to affect production.”
Tensions have eased but the crisis is far from over. Russia is the world's largest energy producer and Ukraine hosts a network of strategic pipelines that carry more than half of Russia's gas exports to the EU. So, any conflict between the two countries threatens oil and gas supplies and puts Europe's energy security and indeed economic recovery at risk.
Russia and Ukraine together account for roughly 40% of global grain exports, mainly wheat. Russia is also a large corn exporter and a conflict would likely lead to food and energy price inflation.
Ore deposits of palladium are rare and are mostly located in Russia and South Africa. Russian resource nationalism, as has been seen with natural gas, could lead to supply disruptions and to palladium going higher in the coming months. Some analysts believe palladium may be in deficit for most of the next decade as Russia depletes stockpiles. Also, industrial uses and investment demand for the precious metal looks set to increase.
The 7 Key Bullion Storage Must Haves
A diversification into precious metals remains prudent and will again protect investors, both retail and institutional, pensions owners and savers, over the medium and long term. However, this is only the case if bullion owned is physical bullion coins and bars and not digital, pooled, or paper formats. Fully segregated and allocated coin and bar storage remains the safest way to own bullion.
Download your copy of 7 Key Allocated Gold Storage Must Haves here.
Below is the photo that reveals why US and EU bankers despise Russian President Putin so much. As a quick experiment, type "Obama, gold" and "Cameron, gold" into Google images and conduct a search. You will discover that theses searches come up empty. Any similar photos to the one below by US President Obama or UK Prime Minister Cameron would be a massive betrayal of their puppet masters - the BIS, the IMF, the World Bank, the ECB, the BOE and the Federal Reserve.
Simply put, physical gold and physical silver are real money. The US dollar and the euro are not.
Russian President Vladimir Putin displays his fondness for gold
And in case you've missed them, our most recent SmartKnowledge videos are listed below:
The entire idea of safe nuclear energy has arguably been a cover for nuclear weapons production … at the expense of our health and the environment.
Moreover, governments have been covering up meltdowns for more than 50 years.
As a History Chanel special notes, a nuclear meltdown occurred at the world’s first commercial reactor only 30 miles from downtown Los Angeles, and only 7 miles from the community of Canoga Park and the San Fernando Valley area of Los Angeles.
Specifically, in 1959, there was a meltdown of one-third of the nuclear reactors at the Santa Susana field laboratory operated by Rocketdyne, releasing – according to some scientists’ estimates – 240 times as much radiation as Three Mile Island.
But the Atomic Energy Commission lied and said only there was only 1 partially damaged rod, and no real problems. In fact, the AEC kept the meltdown a state secret for 20 years.
There were other major accidents at that reactor facility, which the AEC and Nuclear Regulatory Commission covered up as well. See this.
Two years earlier, a Russian government reactor at Kyshtm melted down in an accident which some claim was even worse than Chernobyl.
The Soviet government hid the accident, pretending that it was creating a new “nature reserve” to keep people out of the huge swath of contaminated land.
Journalist Anna Gyorgy alleges that the results of a freedom of information act request show that the CIA knew about the accident at the time, but kept it secret to prevent adverse consequences for the fledgling American nuclear industry.
1980s Studies and Hearings
In 1982, the House Committee on Interior and Insular Affairs received a secret report received from the Nuclear Regulatory Commission called “Calculation of Reactor Accident Consequences 2″.
In that report and other reports by the NRC in the 1980s, it was estimated that there was a 50% chance of a nuclear meltdown within the next 20 years which would be so large that it would contaminate an area the size of the State of Pennsylvania, which would result in huge numbers of a fatalities, and which would cause damage in the hundreds of billions of dollars (in 1980s dollars).
Those reports were kept secret for decades.
Well-known writer Alvin Toffler pointed out in Powershift (page 156):
At least thirty times between 1957 and 1985—more than once a year—the Savannah River nuclear weapons plant near Aiken, South Carolina, experienced what a scientist subsequently termed “reactor incidents of greatest significance.” These included widespread leakage of radioactivity and a meltdown of nuclear fuel. But not one of these was reported to local residents or to the public generally. Nor was action taken when the scientist submitted an internal memorandum about these “incidents.” The story did not come to light until exposed in a Congressional hearing in 1988. The plant was operated by E. I. du Pont de Nemours & Company for the U.S. government, and Du Pont was accused of covering up the facts. The company immediately issued a denial, pointing out that it had routinely reported the accidents to the Department of Energy.
At this point, the DoE, as it is known, accepted the blame for keeping the news secret.
And former soviet leader Mikhail Gorbachev said on camera for a Discovery Network special (the must-watch “The Battle of Chernobyl“) that the Soviets and Americans have each hidden a number of nuclear accidents from the public:Government Has Been Covering up Radiation Danger for 69 Years
The U.S. tried to cover up the destructive nature of radiation produced by nuclear weapons 71 years ago. As Democracy Now reports:
The army was well aware in 1943 of the enormous potential for radiation dangers to civilians and military personnel as a result of the use of radioactive weapons ….
[The New York Times] was essentially putting out the official government narrative [regarding the bombing of Hiroshima and Nagasaki], which is that atomic radiation is not harmful, is not a major byproduct of the nuclear weapons program. You know, it’s only the blast that has essentially a very short impact. The reason that this has importance is that for really a half century, this narrative became the government’s response to all protests against nuclear power, the nuclear weapons programs of the 1950s and 1960s and the Cold War. So, [The New York Times] essentially set the table that the government was to occupy for the next half century as they disputed any attempt to rein in, you know, the rapid acceleration of nuclear weapons and power programs.
Beverly Deepe Keever notes:
Sixty years ago on March 1, 1954, in the heart of the Pacific Ocean, the United States detonated the most powerful nuclear weapon in its history…. The 15-megaton hydrogen bomb was 1,000 times more powerful than the atomic bomb that devastated Hiroshima …. Unlike Hiroshima’s A-bomb, Bravo was laced with plutonium …. And, unlike the atomic airburst above Hiroshima, Bravo was a shallow-water ground burst. It vaporized three of the 23 islands of tiny Bikini Atoll, 2,600 miles southwest of Hawaii, and created a crater that is visible from space.
Wafting eastward, the cloud powdered 236 islanders on Rongelap and Utrik atolls and 28 U.S. servicemen. The islanders played with, drank and ate the snowflake-like particles for days and began suffering nausea, hair loss, diarrhea and skin lesions when they were finally evacuated to a U.S. military clinic.
Within days after the Bravo explosion, the U.S. cover-up had secretly taken a more menacing turn. In an injustice exposing disregard for human health, the Bravo-exposed islanders were swept into a top-secret project in which they were used as human subjects to research the effects of radioactive fallout.
A week after Bravo, on March 8, at the Navy clinic on Kwajalein, E.P. Cronkite, one of the U.S. medical personnel dispatched there shortly after the islanders’ arrival, was handed a “letter of instruction” establishing “Project 4.1.” It was titled the “Study of Response of Human Beings Exposed to Significant Beta and Gamma Radiation Due to Fallout from High Yield Weapons.”
To avoid negative publicity, the document had been classified as “Secret Restricted Data” until 1994, four years after the end of U.S. responsibilities for its trusteeship at the U.N. and when the Clinton Administration began an open-government initiative.
It would be 40 years before islanders learned the true nature of Project 4.1. Documents declassified since 1994 show that four months before the Bravo shot, on Nov. 10, 1953, U.S. officials had listed Project 4.1 to research the effects of fallout radiation on human beings as among 48 experiments to be conducted during the test, thus seeming to indicate that using islanders as guinea pigs was premeditated.
However, an advisory commission appointed by President Bill Clinton in 1994 indicated “there was insufficient evidence to demonstrate intentional human testing on Marshallese.”
For this human-subject research, the islanders had neither been asked nor gave their informed consent — which was established as an essential international standard when the Nuremberg code was written following the war crimes convictions of German medical officers.
Under Project 4.1, the exposed Rongelapese were studied yearly and so were the Utrik Islanders after thyroid nodules began appearing on them in 1963. The islanders began complaining they were being treated like guinea pigs in a laboratory experiment rather than sick humans deserving treatment.
A doctor who evaluated them annually came close to agreeing when he wrote 38 years after Bravo, “In retrospect, it was unfortunate that the AEC [Atomic Energy Commission], because it was a research organization, did not include support of basic health care of populations under study.”
During this time, Bravo-dusted islanders developed one of the world’s highest rates of thyroid abnormalities; one third of the Rongelapese developed abnormalities in the thyroid, which controls physical and mental growth, and thus resulted in some cases of mental retardation, lack of vigor and stunted development. Islanders complained of stillborn births, cancers and genetic damage.
Seven weeks after Bravo, on April 21, Cronkite recommended to military officials that exposed Marshallese generally “should be exposed to no further radiation” for at least 12 years and probably for the rest of their natural lives.
Yet, three years later, U.S. officials returned the Rongelapese to their radioactive homeland after they had spent three months at the Kwajalein military facility and at Ejit Island. Besides being Bravo-dusted, their homeland by 1957 had accumulated radioactivity from some of the 34 prior nuclear explosions in the Marshall Islands. Utrik Islanders were returned home by the U.S. shortly after their medical stay on Kwajalein.
For 28 years the Rongelapese lived in their radioactive homeland until 1985. Unable to get answers to their questions, they discounted U.S. assurances that their island was safe.
Failing to provide the Rongelapese “information on their total radiation condition, information that is available, amounts to a coverup,” according to a memo dated July 22, 1985, written by Tommy McCraw of the U.S. Department of Energy’s Office of Nuclear Safety.Cover Up Continues to This Day
Nothing has changed. Governments worldwide continue to this day to cover up the risk of a nuclear accident, and the amount – and health effects – of radiation released by military and energy facilities. And see this, this, and this.
The Government Has Engaged In a Series of Nuclear Cover-Ups Ever Since Hiroshima was originally published on Washington's Blog