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Post by Duc N Altum on Feb 25, 2016 1:21:52 GMT -5
"New Silk Road" Part 2: Cold War Or Competition?
Submitted by Tyler Durden on 05/27/2015 - 19:00 Part 2: Cold War or Competition on the New Silk Road.
Note: In Part 1 of “The New Silk Road,” we examined the China’s plan for rebuilding the Silk Road, stretching from Europe to Asia. In Part 2, we look at currently proposed projects, and geopolitical rivalries that could stall and hamper progress.
Silk Road Projects: It is important to understand that the new “Road’ is not a formal plan in any sense but merely a broad outline of goals, a work in progress, being filled in, opportunistically, with projects as they are developed, and as negotiations with target countries allow. The Road is also not a 'start-up' from scratch, but builds upon and extends a number of projects that have been ongoing with China's partners. The Iran-Pakistan-China project (described in Part 1) is one of the few that provides more details, but it is still very much in the planning stage. The second proposed project, only recently made public, focuses on Russia. China is also proposing a partnership with India for its third project. The Pakistan program is an important economic development project that ties in with the Road as one of the connecting dots along the way, while the proposed program for Russian could become the nexus for the entire Road project, and the proposed India project could become the crucial piece in tying it all together. Russia and China, the Emerging Partnership:What makes Russia important enough to include in the plan? A better question might be: how is it possible to leave out Russia, the largest country in Eurasia, from a plan to build across the entire region?
In a recent meeting in Moscow, celebrating the 70th anniversary of the allied victory in World War II – which saw Indian, Chinese, and Russia troops parading in Red Square – China and Russia signed multiple agreements to tie development of the Chinese sponsored Silk Road to the Russian sponsored Eurasian Economic Union (EAEU). The EAEU plan is a Kremlin-sponsored trade union between Russian, Kazakhstan, Kyrgyzstan, Belarus and Armenia, that has been pilloried in the western press as part of Russia’s supposed underlying agenda to re-establish the Soviet Union. With Russia’s inclusion, the plan for the Silk Road will extend from Beijing to the border of Poland. The blossoming cooperation between Russia and China is not something to be ignored, according to former Indian diplomat M.K. Bhadrakumar: “Clearly, the cold blast of western propaganda against the EAEU failed to impress China…China’s integration with the EAEU means in effect that a real engine of growth is being hooked to the Russian project. In reality, China is the key to the future of the EAEU. Significantly, Xi has combined his visit to Moscow with a tour of Belarus and Kazakhstan, the two other founder members of the EAEU….This is vital for the implementation of the Silk Routes via Russia and Central Asia.” The Chinese/Russian agreements cover eight specific projects, starting with the development of a high speed railway that will connect Moscow and Kazan (Tatarstan Republic), and will be extended to China, connecting the two countries via Kazakhstan. China’s Railway Group has won a contract for $390 million to build the road, with China contributing an initial $5.8 billion toward total estimated costs of $21.4 billion. Eventually, the planners hope to link this project to Russia’s planned high speed railway to Europe. Also, China's Jilii province has offered to build a cross-border high speed railway link between the two countries connecting with Russia's major Pacific port city, Vladivostok. In addition, the two nations are expanding their energy partnership through a variety of projects. As Oilprice reported in a May 12 article, “the Russian hydropower company RusHydro and China Three Gorges Corp. have signed a deal to cooperate on a 320-megawatt hydroelectric power project in Russia’s Far East…near the border between China and Russia.” As described, this is the largest doggone project in China or Russia, already under construction, and is expected to generate 1.6 trillion watts of electrical energy per year, with an estimated cost of around $400 billion. China has also proposed developing an economic corridor between Russia, Mongolia, and China, a plan likely to include the EAEU member states, the initial step in development of one of the major components of the Silk Road, the Eurasia Economic Corridor, a preferential trade zone stretching across the region. Several smaller joint project deals were also signed, including establishing a $2 billion agriculture financing fund. Geopolitics on the Silk Road:
Until very recently, it was widely assumed that the US would lead its western allies in a campaign against the Russian/Chinese deal to develop the Silk Road, but events have been reversing with remarkable speed. With Obama desperately trying to keep the wars in Yemen, Syria, and Iraq from metastasizing across the region, Obama’s Middle East policy is at a crossroads, with none of the big issues likely to be resolved before his term ends. Clearly, the US President wants to concentrate on Asia and reduce the US presence in the Mid-East, a region that has bedeviled every President for more than a generation. The Deal to Get Out:
In the midst of all this, and after more than a two year absence from Russia, Kerry and his entourage requested an immediate urgent meeting with Putin and Lavrov that was granted by the Kremlin. There is widespread speculation over what might have taken place in the Kremlin meeting on May 8th. Yet, the fact that the meeting took place at all may be more important than any agreements reached, because it clearly shows some form of thaw in a relationship that’s in process. The rumor out of Russia is that Kerry requested Putin’s help in resolving the ME conflicts and closing the nuclear deal with Iran, with the Russian President agreeing. The quid pro quo for Russia was the US lowering tensions in Ukraine. The issue of Crimea was apparently not even raised, while the visit ended with Kerry’s unprecedented warning to Kiev to abide by the Minsk 2 agreement for a truce in Ukraine’s eastern provinces. Much of the news media is speculating that the US is starting to remove the ‘crime scene tape’ around the Kremlin. Whether this is really a US offer of an olive branch to Russia is still pretty much guesswork, and even if it were, how far the US is willing to go in accommodating the Kremlin is largely unknown. Stratfor, the popular internet intelligence newsletter, speculates that the US is willing to start easing sanctions on Russia. Israel and the Gulf Kingdoms:
For the Israelis, any easing of tensions with Iran and Russia is very bad news. In the Middle East, Israel is the canary in the coal mine, and is always among the first to discern the faintest signs of political unrest in its region. There's no denying the significance of Israel's reaction to the US/Iran nuclear deal and US coordination with Iran and Russia in Syria and Iraq. Israel placed all of its chips on its ability to stop the deals, and lost badly, while perhaps severely damaging its relationship with it largest ally, the US. Now, the howls of protest and betrayal pour out of every media source in the country, and Israel is not the only one. Saudi Arabia also feels left out in the cold with the Iran deal. Proposed Partnership with China and India:
If it were possible to put politics aside, there’s no question that China’s single best partner for the Road would be its giant neighbor India, bringing together the two most important markets for traders on the original ancient Silk Road. As the Associated Press reported on May 14, 2015: “Both countries are members of the BRICS grouping of emerging economies, which is now establishing a formal lending arm, the New Development Bank, to be based in China's financial hub of Shanghai and headed by a senior Indian banker. India was also a founding member of the embryonic China-backed Asian Infrastructure Investment Bank. The cooperation between China and India is only growing, and their needs appear to be compatible, as the AP goes on to note: China is looking to India as a market for its increasingly high-tech goods, from high-speed trains to nuclear power plants, while India is keen to attract Chinese investment in manufacturing and infrastructure. With a slowing economy, excess production capacity and nearly $4 trillion in foreign currency reserves, China is ready to satisfy India's estimated $1 trillion in demand for infrastructure projects such as airports, roads, ports and railways.” If India chooses to partner with China in the Silk Road, it could keep China building for the rest of the century, in a project that would combine the world’s most populous nations, with more than 2.6 billion people. With Russia already a partner, and Iran waiting in the wings to join, the project could add almost another quarter of a billion people, with a combined total of over one third the global population. A better fit would be hard to find. But there is no shortage of historical baggage between China and India, ranging from a half century of unresolved border disputes; China’s growing relationship with Pakistan, India’s longtime adversary; and India’s close relationship with the US and Japan, both opposed to China’s claims in the South China Sea. In a recent meeting in Beijing, China and India signed agreements for $22 billion in development projects, disappointing to many observers when compared to the $47 billion committed to the China/Pakistan deal. A former Indian diplomat, Bhadrakumar, argues, “that strategic distrust cannot be wished away,” and “...that India is not ready to replace the west as its development partner.” It seems like the US influence with India has at least slowed prospects of recruiting India as a major Silk Road partner. Yet, the results are not so simple to predict since so many countries involved are dependent upon trade with China to the tune of hundreds of billions of dollars annually, and are also active trading partners with both Russia and Iran. Even in the cold war, India became adept in its studied policy of co-existence with the Soviet Union and the US, which allowed India to play both sides. For pragmatic India, the choice of development partners may depend on the simple formula of 'following the money', given the fact that China is one of the few countries in the world with sufficient resources to finance the rebuilding of India's infrastructure. The rush of western allies, including India, to join China's sponsored Asian Infrastructure Bank speaks clearly to the fact that western business is eager to take part in the Road projects. There are probably few banks in the world that would hesitate to finance major components of the project. However, whether the recent sea change in the US/Russian dynamic is a prelude for US support of the Silk Road project remains an open question. Coming in June, Part 3: Prospects for Success and What it Means for Investors. www.zerohedge.com/news/2015-05-27/new-silk-road-part-2-cold-war-or-competition
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Post by Duc N Altum on Feb 25, 2016 1:22:56 GMT -5
China to bring their banking system to all points along new silk roadAugust 5, 2015 www.examiner.com/article/china-to-bring-their-banking-system-to-all-points-along-new-silk-roadIn 2014, China began some major preparations for the introduction of the Yuan as a viable trade currency that would not only compete with the dollar, but provide countries an alternative to the current singular reserve currency system. And on Aug. 5, the newest steps to bring the Yuan to all corners of the globe started with an agreement for cross-border loan services between Fujian province and Taiwan.According to officials at the People's Bank of China (PBOC), infrastructures such as cross-border banking will occur all along the Silk Road trade route that is expected to traverse from South Korea all the way to London, allowing for both free trade, and now banking and lending services in the Yuan currency, and help facilitate commerce outside the need for dollar swap mediation. Since 2009 the Chinese Yuan has grown in scope in the global economy, with more than 23 nations creating Yuan swap lines to facilitate direct bi-lateral trade. And in perhaps the biggest financial coup d'etat in several years, China was able to get nearly all major economies to sign onto the new Asian Infrastructure Investment Bank (AIIB), which will compete head to head with the West's stalwart, the IMF. Officials said the launch last week of another trial cross-border yuan loan service agreement, signed between Fujian province and Taiwan, will go a long way to widen funding sources and lower finance costs for both domestic and overseas companies in the region.
The government is offering the service to firms operating in a newly established free trade zone in the province, allowing companies and projects registered in Xiamen to borrow yuan from institutions in Taiwan. Li also said the new investment channel would bring banks in Xiamen closer to their Taiwan counterparts, increase the intermediary business income of local banks, and accelerate the opening up of the province's financial services sector, which is likely to play a key role in funding projects within the country's Belt and Road Initiative. The Silk Road Economic Belt and the 21st Century Maritime Silk Road initiatives were proposed by President Xi Jinping in 2013 to improve the infrastructure connectivity along the ancient trading routes. - China Daily
The expansion of financial services along the Silk Road will act as a major component for accomplishing the goal of global free trade, and use of individual currencies in direct bi-lateral commerce. And with the Silk Road expected to connect Asia with Central Asia, Eurasia, the Middle East, Africa, as well as Europe itself, the United States will eventually find itself isolated unless they change course and get on board with the Chinese led initiative, and away from singular dollar hegemony. It is one thing to build a road from one point of the globe to another, but it is another to have in place infrastructures like banking facilities installed all along that road. And yet that appears to be exactly China's overall goal with the Silk Road, where one day soon trade can take place in a one stop shop, and where all mechanisms of trade agreements can be signed, funded, and enacted at centralized locations right there in the heart of every nation along the trade route.
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Post by Duc N Altum on Feb 25, 2016 1:47:47 GMT -5
More Countries Are Turning To Their Own Currencies As The US Economy Disintegrates February 24, 2016from X22 Report New home sales implode signaling the bursting of the housing bubble. Manufacturing and the service sector have crashed. It is time to get rid of the Federal Reserve, it does not serve the interests of the people. Russia increases its gold reserves. Countries are now in talks to use their own currencies and move away from the dollar. thedailycoin.org/?p=64142
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Post by Duc N Altum on Feb 25, 2016 3:00:25 GMT -5
When Currency Pegs Break, Global Dominoes Fall February 24, 2016 by Charles Hugh Smith, Of Two Minds When a currency peg breaks, it unleashes shock waves of uncertainty and re-pricing that hits the global financial system like a tsunami. The U.S. dollar has risen by more than 35% against other major trading currencies since mid-2014:If all currencies floated freely on the global foreign exchange (FX) market, this dramatic rise would have easily predictable consequences: everything other nations import that is priced in dollars (USD) costs 35% more, and everything the U.S. imports from other major trading nations costs 35% less.
But some currencies don’t float freely on the global FX markets: they’re pegged to the U.S. dollar by their central governments. When a currency is pegged, its value is arbitrarily set by the issuing government/central bank.
For example, in the mid-1990s, the government/central bank of Thailand pegged the Thai currency (the baht) to the USD at the rate of 25 baht to the dollar.
Pegs can be adjusted up or down, depending on a variety of forces. But the main point is the market is only an indirect influence on the peg, not the direct price-discovery mechanism as it is with free-floating currencies.
If central states/banks feel their currency is becoming too strong via a vis the USD, they can adjust the peg accordingly.
Why do states peg their currency to the U.S. dollar? There are several potential reasons, but the primary one is to piggyback on the stability of the dollar without having to convince the market independently of one’s stability.
Another reason to peg one’s currency to the USD is to keep your currency weaker than the market might allow. This weakness helps make your exports to the U.S. cheap/ competitive with other nations that have weak currencies.
Nations defend their peg by selling dollars and buying their own currency. The way to understand this is supply and demand: if nobody wants the currency, the demand is low and the price falls. If there is strong demand for a currency, it rises in purchasing power if the supply is limited.
By selling USD and buying their own currency, nations put downward pressure on the dollar and put a floor under their own currency.
The problem is you need a big stash of dollars to sell when you want to defend your peg. If you run out of dollars (usually held in U.S. Treasury bonds), you can’t defend your peg, and the peg breaks.
This is why China amassed a $4 trillion stash of U.S. Treasuries. Now that the USD has soared, China’s yuan (RMB) has also soared against other currencies because it’s pegged to the USD. This has made Chinese goods more expensive in other currencies.
Currently, the government/central bank of China is attempting to adjust its currency peg to weaken the yuan vis a vis the dollar. To avoid showing signs of losing control, China is attempting to defend the yuan against a break in the peg, and it has burned over $700 billion of its stash of USD in the past few months defending the yuan peg.
Here is a chart of the yuan in USD. Note that China moved the peg from 8.3 to 6.8 to the dollar to strengthen the yuan when the U.S. complained that it was undervalued. The yuan rose to 6 to 1 USD in early 2014, and has since started to weaken as the dollar has soared. The problem with currency pegs is they have a nasty habit of breaking. The Seneca Cliff offers a model for the way pegs appear stable for a long time and then collapse:Why the Chinese Yuan Will Lose 30% of its Value
When a currency peg breaks, it unleashes shock waves of uncertainty and re-pricing that hit the global financial system like a tsunami. When Thailand’s 25-to-1 peg to the USD broke in 1997, it triggered the Asian Contagion that nearly pushed the world economy into recession.
Now that China’s peg to the dollar is under assault, what happens to the global economy when a weakening China finds it can’t stop a rapid devaluation of its currency?
Gordon Long and discuss this and other critically important aspects of currency pegs in THE U.S. DOLLAR & THE GLOBAL “PEG PAIN TRADE” (28:36 min.)MARO ANALYTICS - US$ & THE GLOBAL "PEG PAIN TRADE" w/Charles Hugh SmithPublished on Feb 21, 2016thedailycoin.org/?p=64068
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Post by Duc N Altum on Feb 25, 2016 11:34:46 GMT -5
Here’s the Real Reason Wall Street Bank Stocks Tank When Oil Prices Dive February 25, 2016 by Pam Martens and Russ Martens, Wall Street on Parade The same phenomenon that’s been playing out for months took center stage yesterday with one notable twist: oil prices dove, the broader stock market swooned, but the mega Wall Street banks took a worse beating than the broader stock market averages. The Dow Jones Industrial Average lost 1.14 percent yesterday while Bank of America, Citigroup and Morgan Stanley were off by more than 3 percent. In an unusual twist, JPMorgan Chase, the bank that analyst Mike Mayo has preposterously called the Lebron James of banking, performed the worst among its peers yesterday, down 4.18 percent.What knocked the wind out of JPMorgan’s sails yesterday is at the heart of why the banks keep tanking when oil prices swoon. In a nutshell, the market doesn’t think these banks are coming clean about their exposure to oil – whether it’s in loans to beleaguered oil companies or whether it’s derivatives it sold to its corporate clients and hedge funds to make wagers on the declining price of oil. In addition, the market thinks these banks have not taken adequate reserves to cover their potential losses and that they are waiting until the last possible moment in order for executives to boost their own pay and bonuses. Where would the market get such cynical ideas? This is precisely how many of these banks behaved with the subprime debt crisis in the leadup to the 2008 financial crash. JPMorgan Chase poured some gasoline on the fire of these suspicions yesterday when it held its annual investor day and announced that it will be beefing up its reserves to cover potential losses in the energy sector to $1.3 billion by the end of this quarter. The bank noted further that if oil stays in the $25 range for over a year, it would have to put aside an additional $1.5 billion. JPMorgan Chase has owned up to $44 billion in exposure (loans and commitments) to the energy sector with $19 billion of that being rated below investment grade. A reserve of $1.3 billion represents just 3 percent of total exposure. That amount of reserves stands in contrast to data provided by the Federal Reserve on November 5, 2015 from the findings of the Shared National Credit Program (SNC), an annual review conducted by bank regulators to examine syndicated loans of $20 million or more that are shared between three or more banks.According to the SNC, “Oil and gas commitments to the exploration and production sector and the services sector totaled $276.5 billion, or 7.1 percent, of the SNC portfolio. Classified commitments — a credit rated as substandard, doubtful, or loss — among oil and gas borrowers totaled $34.2 billion, or 15.0 percent, of total classified commitments, compared with $6.9 billion, or 3.6 percent, in 2014.” In other words, if 15 percent of syndicated loans to the oil and gas sector are rated substandard, doubtful or a loss, why aren’t the banks reserving at a rate closer to 15 percent instead of the low single digits? Not to put too fine a point on it, but these are the same banks that received the largest taxpayer bailout in the history of finance just eight years ago. The scariest part of the SNC review resides in this one sentence: “Results are based on analyses prepared in the second quarter of 2015, using data provided by the institutions as of December 31, 2014, and March 31, 2015.” Oil prices have declined by almost half since March 31, 2015, meaning impaired debt should have grown commensurately.Another serious problem, according to the SNC review, is that the banks that syndicated these loans “continued to refinance and modify loan agreements to extend maturities. These transactions had the effect of relieving near-term refinancing risk, but may not improve borrowers’ ability to repay their debts in the longer term.” The SNC warned that “Bank management should ensure such loan modification strategies are not substituted for realistic debt repayment or to avoid recognizing problem loans.” This is another big angst in the market: are the banks extending and pretending that the losses aren’t real, hoping for a miraculous spike in the price of crude to bail out the bad loans? According to a February 12, 2016 article by Christopher Helman at Forbes, other major banks have the following estimated energy sector exposure (loans and commitments): Wells Fargo $42 billion; Citigroup $58 billion; Bank of America $43.8 billion; Morgan Stanley $16 billion.
What no one seems to be talking about is what the derivatives exposure is on the part of the banks to the energy sector. The price action of the bank stocks on down days for oil is sending a crystal clear message that we may be in for a lot of negative surprises in that arena.
Stock price action represents the composite wisdom of all participants in the market, including those with long memories. The market remembers that the London Whale derivatives fiasco at JPMorgan was first characterized by CEO Jamie Dimon as a “tempest in a teapot” until it became $6.2 billion in bank depositor losses. Then there was Citigroup telling investors that it had $13 billion in subprime debt exposure when it was actually $50 billion. No one went to jail in either of these matters, sending a clear message to Wall Street that manipulating the truth is an accepted form of earnings management. wallstreetonparade.com/2016/02/heres-the-real-reason-wall-street-bank-stocks-tank-when-oil-prices-dive/
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Post by Duc N Altum on Feb 25, 2016 12:19:48 GMT -5
Ok, Derivative problems this weeks folks. First the Eurex Halts it's derivatives market on Monday 2/22/16 and now today 2/25/16 the Euronext partially halts it's derivatives market? Something interesting going on in the derivatives market for these markets to be halted as we are seeing this frequent, especially 2 times in one week with derivatives issues in the Eurex and now Euronext? GREAT STUFF IMO!!! The Derivatives Chain must be experiencing some impactful snags, and just looking forward to when it completely breaks. Aimo. -Duc Euronext Halts "Part Of The Market" Due To Technical Difficulties Submitted by Tyler Durden on 02/25/2016 On Monday, while European stocks were soaring derivatives traders found they couldn't put any trades in when the largest European derivatives market, the Eurex Exchange, announced trading had been suspended until further notice. Then yesterday, as stocks were crashing, the NY Fed announced that "due to technical difficulties", it would cancel its 11:15 am Agency MBS POMO which unleashed the latest whopper of a short squeeze.
Now, moment ago, the Euronext exchange has likewise decided to break, announcing that the "Euronext is currently experiencing technical issues and has decided to halt part of the market. The list of impacted instruments is enclosed."
It was unclear which part of the market is closed: perhaps the selling one because as soon as the notice hit, the Stoxx600 proceeded to surge even more in typical manipulated fashion. There are 2222 securities impacted and are listed in the linked file.
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Once again, we can't help but wonder if the developed world isn't learning from China, where any time a surge of volatility emerges, markets are just quietly shut down, or worse.
Whatever the case, we fully expect futures and cash markets to ramp in the time when this latest market has an "unexpected outage." www.zerohedge.com/news/2016-02-25/euronext-halts-part-market-due-technical-difficulties P.S- And here is the link to the post of the Feb 22, 2015 Eurex halt this past Monday I am referring to, in comparison to the halt today with this one above here---> cmkxunofficial.proboards.com/post/161197
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Post by John Winston Lennon O'Boogie on Feb 25, 2016 13:42:34 GMT -5
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LADY B
Dr. Of Diamonds
W.A.I.T. ~ Watching, Anticipating, Intentionally Trusting!
Posts: 156
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Post by LADY B on Feb 25, 2016 15:40:52 GMT -5
Ok, Derivative problems this weeks folks. First the Eurex Halts it's derivatives market on Monday 2/22/16 and now today 2/25/16 the Euronext partially halts it's derivatives market? Something interesting going on in the derivatives market for these markets to be halted as we are seeing this frequent, especially 2 times in one week with derivatives issues in the Eurex and now Euronext? GREAT STUFF IMO!!! The Derivatives Chain must be experiencing some impactful snags, and just looking forward to when it completely breaks. Aimo. -Duc Very interesting! I concur, this is great stuff! Among these and other posts alerting us of what "signs" to watch for, I vaguely recall reading a post alerting us to "WATCH THE DERIVATIVES!"
It is my observation that having eyes to see doesn't necessarily bring solace to all for not everyone recognize or understands data captured via their optical faculties. Some see with their eyes wide shut. It is common to behold multitudes selfishly or hastily pursuing instant gratification by any means necessary. Regardless of the potential detriment or forfeiture, their focus is often limited and geared towards the "now!" Give me my portion "now!" (eg "Deal or No Deal!") In hindsight some soon realize their forfeiture, wishing they had not compromised, but awaited the authentic prize! I tell my loved ones to be sure to make the right choices for "Regrets are realizations which come much too late!"
I long realized "patience" is a virtue which must possess our souls and "trust is a must." Because we don't often "see" what we hope for doesn't mean we're not going to "see" it in the proper dispensation and elimination of "time" if we continue. (Live) Fellow CMKX shareholders, FWIW, I count it all joy knowing the best is yet to come; and what is best for us is always worth waiting for. Along the "waiting path" we may encounter turbulence and experience adverse unforeseen situations that causes us to contemplate giving up... but don't give up! Be encouraged...though fulfillment has been delayed, IMHB (belief) it will not be denied. Let's willingly and patiently await the promises!!! "Let's Finish With The Beginning In Mind!"
Euronext Halts "Part Of The Market" Due To Technical Difficulties Submitted by Tyler Durden on 02/25/2016 On Monday, while European stocks were soaring derivatives traders found they couldn't put any trades in when the largest European derivatives market, the Eurex Exchange, announced trading had been suspended until further notice. Then yesterday, as stocks were crashing, the NY Fed announced that "due to technical difficulties", it would cancel its 11:15 am Agency MBS POMO which unleashed the latest whopper of a short squeeze.
Now, moment ago, the Euronext exchange has likewise decided to break, announcing that the "Euronext is currently experiencing technical issues and has decided to halt part of the market. The list of impacted instruments is enclosed."
It was unclear which part of the market is closed: perhaps the selling one because as soon as the notice hit, the Stoxx600 proceeded to surge even more in typical manipulated fashion. There are 2222 securities impacted and are listed in the linked file.
* * *
Once again, we can't help but wonder if the developed world isn't learning from China, where any time a surge of volatility emerges, markets are just quietly shut down, or worse.
Whatever the case, we fully expect futures and cash markets to ramp in the time when this latest market has an "unexpected outage." www.zerohedge.com/news/2016-02-25/euronext-halts-part-market-due-technical-difficulties P.S- And here is the link to the post of the Feb 22, 2015 Eurex halt this past Monday I am referring to, in comparison to the halt today with this one above here---> cmkxunofficial.proboards.com/post/161197
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Post by portrush on Feb 26, 2016 12:29:53 GMT -5
Deutsche Bank: It’s time to buy goldLeslie Shaffer | @leslieshaffer1 8 Hours Ago CNBC.com Gold is still expensive, but rising economic risks and market turmoil mean investors should buy it for insurance, Deutsche Bank said Friday. The recovery since the global and European financial crises had put the price of gold under some pressure. The yellow metal, which some analysts view as a safe haven or as a protection against rising inflation, typically underperforms during periods when the economy is growing or inflation is low. However, in a note issued Friday, the German Bank said economic signs are pointing in gold's favor. "There are rising stresses in the global financial system; in particular the rising risk of a U.S. corporate default cycle and the risk of a sharp one-off renminbi devaluation due to the sharp increase in China's capital outflows," Deutsche Bank added."Buying some gold as 'insurance' is warranted." However, even though gold has fallen from levels over $1,900 an ounce in 2011 to around $1,200 an ounce currently, Deutsche Bank said it still looks expensive, ranking as the most expensive commodity relative to its 15-year trading history. "A bit like insurance, which is often a grudge purchase for many, some investors may balk at the current levels," it said. "We would, however, argue that given the plethora of negative deposit rates globally, the holding cost of gold is now negligible in many jurisdictions, and therefore gold deserves to be trading at elevated levels versus many other assets." One of the arguments against investing in gold is that it is a zero-yielding asset. But with several central banks, including the European Central Bank, the Bank of Japan and Sweden's central bank, cutting interest rates into negative territory, that erodes some of the advantage of holding cash as opposed to gold, the bank said. Slower economic growth may also ease some of the risks gold prices will fall further, the bank said. "We think the (economic) risks are to the downside. Gold has tended to underperform in an environment of strong global growth, so whilst not an outright tailwind, slowing growth certainly eases the pressure on gold," it said in the note. Deutsche Bank had previously expected gold would fall below the $1,000 an ounce level by the fourth quarter of this year as the U.S. Federal Reserve increased interest rates. But instead of three interest rate hikes this year, Deutsche Bank has since said it expects the Fed to be on hold for longer, anticipating only one rate increase in 2016 amid a contraction in the factory sector, which threatens to spill into the services sector. It now expects that the fourth quarter of 2015 marked the lows for gold prices. In its note Friday, the bank said it raised its forecast for the fourth quarter of this year by 26 percent to $1,230 an ounce. Gold for March delivery was trading at $1,238.90 an ounce at 14:30 SIN/HK time. But Deutsche Bank said buyers should be patient. "Investors need to be tactical, as to the levels at which gold is bought," it said. The precious metal has rallied 16 percent against the euro, 17.5 percent against the U.S. dollar and some 24 percent against sterling so far this year, according to data from BNY Mellon. Even against the resurgent Japanese yen, which has climbed since the Bank of Japan shifted to a negative interest rate policy in late January, gold is up 9 percent, making the precious metal's rally in the top percentile over the last three decades. Deutsche Bank noted gold prices tend to be stronger during the first quarter of the year, but it expects some seasonal weakness, which means there will be better buying opportunities in the second and third quarters. Indeed, Bank of America-Merrill Lynch noted that buying of gold has been strong, with $5.8 billion of inflows over the past three weeks, the highest three-week inflow since June of 2009. -Jenny Cosgrave contributed to this article. Follow CNBC International on Twitter and Facebook. —By CNBC.Com's Leslie Shaffer; Follow her on Twitter @leslieshaffer1 www.cnbc.com/2016/02/26/deutsche-bank-its-time-to-buy-gold.html
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Post by Duc N Altum on Feb 26, 2016 14:07:29 GMT -5
GOLD Is About To Make A Moonshot Higher, Here's Why. By Gregory Mannarino
Published on Feb 25, 2016
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Post by Duc N Altum on Feb 26, 2016 14:08:37 GMT -5
Economic Recovery? 13 Of The Biggest Retailers In America Are Closing Down Stores February 26, 2016 Barack Obama recently stated that anyone that is claiming that America’s economy is in decline is “peddling fiction“. Well, if the economy is in such great shape, why are major retailers shutting down hundreds of stores all over the country? Last month, I wrote about the “retail apocalypse” that is sweeping the nation, but since then it has gotten even worse. Closing stores has become the “hot new trend” in the retail world, and “space available” signs are going up in mall windows all over the United States. Barack Obama can continue huffing and puffing about how well the middle class is doing all he wants, but the truth is that the cold, hard numbers that retailers are reporting tell an entirely different story. thedailycoin.org/?p=64306 The US Economy Is Contracting As Business Is The Worst Since 2008 - Episode 903aPublished on Feb 25, 2016
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Post by Duc N Altum on Feb 27, 2016 5:54:48 GMT -5
Satyajit Das: This Is Why You Can Expect Another Global Stock Market Meltdown02/26/2016 The mispricing of assets across world markets has reached epidemic proportions.
Stock prices have made strong advances over the past several years, yet market analysts see further gains, arguing that the selloffs of August 2015 and early 2016 represent a healthy correction. But this rise in stock values has been underpinned by financial engineering and liquidity — setting the stage for a global financial crisis rivaling 2008 and early 2009. The conditions for a crisis are now firmly established: overvaluation of financial assets; significant leverage; persistent low-growth and deflation; excessive risk taking reliant on central banks for liquidity, and the suppression of volatility. Steve Blumenthal, CEO of CMG Capital Management Group, tells Barron's funds writer Chris Dieterich that his firm has been clinging to ultra-safe bonds and utility stocks during the market storm.
For example, U.S. stock buybacks have reached 2007 levels and are running at around $500 billion annually. When dividends are included, companies are returning around $1 trillion annually to shareholders, close to 90% of earnings. Additional factors affecting share prices are mergers and acquisitions activity and also activist hedge funds, which have forced returns of capital or corporate restructures. The major driver of stock prices is liquidity, in the form of zero interest rates and quantitative easing. To be sure, stronger earnings have supported stocks. But on average, 70% to 80% of the improvement has come from cost-cutting, not revenue growth. Since mid-2014, corporate profit margins have stagnated and may even be declining. A key factor is currency volatility. The strong U.S. dollar is pressuring American corporate earnings. A 10% rise in the value of the dollar equates to a 4%-5% percent decline in earnings. Rallies in European and Japanese stocks have been driven, in part, by the fall in the value of the euro and yen respectively. Lower commodity prices, especially in the energy sector, affects resource firms’ earnings. In the U.S., wage increases may also erode profit margins. The major concern is weak global demand, with lackluster growth in Europe and Japan and deterioration in emerging markets. The lack of revenue improvement and deceleration in earnings growth mean that recent price increases reflect high price/earnings and price/ book ratios. The S&P 500 now trades at around 17-18 times forward earnings, a level that is historically expensive and only exceeded during the 1999-2000 tech-stock bubble. Other markets are also priced above historical levels. The frothy environment is also evident in other investor behaviors. Investors chasing revenue and earnings growth have pushed up valuations, while more than 80% of new initial public offerings were for companies with no earnings. A significant component of activity has been private equity investors taking advantage of high valuations to sell holdings. Other asset classes show similar stresses. Government bonds around the world, unless distressed such as Greece, Ukraine, or Venezuela, trade at artificially low rates. More than $7 trillion of sovereign debt globally now trades at negative yields. This perverse environment has prompted David Rosenberg, chief economist and market strategist at money manager Gluskin Sheff + Associates in Toronto, to muse about the strange phenomenon of investors buying low- or zero-yielding bonds for capital gains and purchasing shares for income. With risk on government bonds increasing, equity analysts argue that investment in shares was preferable to bonds as they offered better protection from a rise in risk-free rates. The lack of returns in government bonds has driven overvaluation in credit markets. Investors have taken on additional risk, moving into corporate bonds, driving rates lower, with the average falling under 2.9% in early 2015.
With rates on investment-grade corporate debt declining, investors have invested increasingly in higher yielding non-investment grade and emerging market debt, including by ever-more exotic issuers for Africa or Asia. The risk-return relationship has deteriorated with investors no longer being compensated for the true default risk. Given the low absolute rates, investors are also increasingly exposed to higher interest rates. A 1% rate-rise will result in around a 7% loss in the value of U.S. corporate bonds, an increase of around 40% from the 5% percent loss five years ago. Real estate prices have risen globally with investors purchasing rental income streams to diversify away from low income financial assets. Markets as disparate as the U.S., Canada, U.K., Germany, France, Scandinavia, Australia, New Zealand, China, India and many other emerging countries have become overheated. Collectibles including fire art, vintage cars, wine, and the like also are showing the effects of excessive enthusiasm. Their prices reflect in part the desire by the world’s “smart money” to escape the manipulation of financial markets and the tremors that could be signaling a big quake to come. www.zerohedge.com/news/2016-02-26/das-why-you-can-expect-another-global-stock-market-meltdown
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Post by Duc N Altum on Feb 27, 2016 5:56:13 GMT -5
I am posting this as an extra, the post above was speaking of "Quantitative Easing" and that sparked a thought of this post I posted back in Jan 2014. This is from "Andrew Huszar" who is giving his confession of how the Fed Used his mind to construct this QE and here is Andrew Huszar saying that "this is the biggest back door bail-out to wall street." Straight from the horses mouth. - Duc. ----->Andrew Huszar: Confessions of a Quantitative Easer - We went on a bond-buying spree that was supposed to help Main Street. Instead, it was a feast for Wall Street. --- Nov. 11, 2013 I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time. My part of the story began a few months later. Having been at the Fed for seven years, until early 2008, I was working on Wall Street in spring 2009 when I got an unexpected phone call. Would I come back to work on the Fed's trading floor? The job: managing what was at the heart of QE's bond-buying spree—a wild attempt to buy $1.25 trillion in mortgage bonds in 12 months. This was a dream job, but I hesitated. And it wasn't just nervousness about taking on such responsibility. I had left the Fed out of frustration, having witnessed the institution deferring more and more to Wall Street. Independence is at the heart of any central bank's credibility, and I had come to believe that the Fed's independence was eroding. Senior Fed officials, though, were publicly acknowledging mistakes and several of those officials emphasized to me how committed they were to a major Wall Street revamp. I could also see that they desperately needed reinforcements. I took a leap of faith.It wasn't long before my old doubts resurfaced. Despite the Fed's rhetoric, my program wasn't helping to make credit any more accessible for the average American. The banks were only issuing fewer and fewer loans. More insidiously, whatever credit they were extending wasn't getting much cheaper. QE may have been driving down the wholesale cost for banks to make loans, but Wall Street was pocketing most of the extra cash. That was when I realized the Fed had lost any remaining ability to think independently from Wall Street. Demoralized, I returned to the private sector. online.wsj.com/news/articles/SB10001424052702303763804579183680751473884
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Post by Duc N Altum on Feb 27, 2016 13:47:15 GMT -5
Looking forward to when the fiat "craps out" and the only solution is a forced asset based system, has been my opinion/ belief, for many many years. -Duc
Contraction Of Credit… Central Bankers Greatest Fear!Posted February 26th, 2016 at 2:58 PM (CST) by Bill Holter & filed under Bill Holter. Dear CIGAs, Just a short comment on a VERY BIG problem! The below chart shows “margin” balance on the NYSE with an inverted chart of the S+P 500 laid over it. Please notice the amount of credit being used to carry stocks now is significantly larger than it was at previous market tops in 2000 and 2007. Also, the amount of credit has begun to contract, this is a classic margin call being met …so far. The danger of course is as it always has been when margin builds like this. As the equity market pulls back, margin calls are issued and in some cases “forced sales” are done. This can, has in the past and most likely will occur and morph into a virtual loop where forced sales weaken prices, creating new margin calls and more forced sales in a negative feedback loop…otherwise known as a market panic. It does need to be pointed out, there will be no “white knight” this time around as there are none left. The Fed rode in and save the markets in late 2008. It was discovered after the fact they lent $16 trillion all over the world. They have blown their balance sheet from some $600 billion in 2007 to a current $4.5 trillion. The Treasury had about $9 trillion of on books debt with a $14 trillion economy. Now the Treasury owes $19 trillion (the real number is multiples of this) supported by a $17 trillion economy (this amount is questionable).
My point is this, in the past when margin debt got to outsized levels it created “bubbles” as it has now. Once the margin debt begins to contract, this is when the waterfall action begins and this is exactly where we are today! Margin debt is contracting with the background of a financial system that is having liquidity problems. Top this off with central banks already all in, and sovereign treasury balance sheets bloated with more debt than the size of their underlying economic output.
Please spend a couple minutes and study the above chart. Governments can and do lie. Brokers can and do lie. Hard and fast statistics and the following results do not. The contraction of margin debt has commenced and markets are following like clockwork. What follows this will be the greatest fear central bankers have always had, a general credit contraction. The problem of course is this credit contraction is coming during a time of unprecedented leverage in both gross and relative terms! The 1930′s saw much pain but neighbors helped neighbors in that episode. The morality and sense of union in the 1930′s is nearly gone, unfortunately almost extinct!
Standing watch,
Bill Holter Holter-Sinclair collaboration Comments welcome! bholter@hotmail.com
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Post by Duc N Altum on Feb 28, 2016 0:06:13 GMT -5
US Government Releases 2015 Financial Statements: "Keeps Getting Worse"02/26/2016 Nearly every single dominant superpower throughout history was eventually consumed by its unsustainable finances. This time is not different. The finances of the US government are obvious, as is the trend. We’re not talking about what ‘might happen’ or ‘could happen’. We’re talking about what IS happening. And this is not a consequence free environment.www.zerohedge.com/news/2016-02-26/us-government-releases-2015-financial-statements-keeps-getting-worse
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