A week after Obama held his first crisis photo op holding a phone while supposedly talking to Putin, he has followed up with another, hour-long conversation. Below is the official White House statement on what was said.
Readout of President Obama’s call with President Putin of Russia
President Obama spoke for an hour this afternoon with President Putin of Russia.
President Obama emphasized that Russia’s actions are in violation of Ukraine’s sovereignty and territorial integrity, which has led us to take several steps in response, in coordination with our European partners.
President Obama indicated that there is a way to resolve the situation diplomatically, which addresses the interests of Russia, the people of Ukraine, and the international community.
As a part of that resolution, the governments of Ukraine and Russia would hold direct talks, facilitated by the international community; international monitors could ensure that the rights of all Ukrainians are protected, including ethnic Russians; Russian forces would return to their bases; and the international community would work together to support the Ukrainian people as they prepare for elections in May.
President Obama indicated that Secretary Kerry would continue discussions with Foreign Minister Lavrov, the government of Ukraine, and other international partners in the days to come to advance those objectives.
And here is the just released Kremlin version:
At the initiative of the American side was held a telephone conversation between Vladimir Putin and the President of the United States Barack Obama.
The acute situation in Ukraine was the topic of the continued conversation. The discussion revealed differences in the approaches and assessments of the causes of the current crisis and situation.
Vladimir Putin, in particular, noted that as a result of the anti-constitutional coup that does not have a national mandate, the current Ukrainian leadership is imposing the Eastern and Southeastern regions of Ukraine and Crimea absolutely illegitimate decisions. Russia can not ignore any appeals for helpd addressed to it in this regard, and is acting appropriately, in full compliance with international law.
The Russian President stressed the paramount importance of Russian-American relations to ensure stability and security in the world. These relations should not be sacrificed due to individual - albeit very important - international problems.
The two leaders agreed that the foreign ministers Sergei Lavrov and John Kerry will continue intensive contacts.
In other words, even more of the same. We eagerly await the Kremlin's take of the same phone conversation. In the meantime, while we await for the official visual from this particular photo op, here is the one from last Saturday.
Are they Tuhao or just Dama?
The first is the Chinese word for filthy, stinking rich, the uncouth bling-blingy rich of the People’s Republic. The second is the name given to middle-aged women dripping in gold. I imagine that two middle-aged women with the yellow bars would lead to a much deserved ‘dispute’ (yes repeating the ideogram for ‘woman’ actually means there’s ‘trouble’, telling you a whole lot about what the Chinese actually think about women insociety).
It doesn’t quite go with the image of the country that we might have once had. But, things change, even the Chinese have the right to hang up their d?ulì conical hats and don something a bit more ostentatious. Showy, brassy, flash, call it what you will; although you might ask why it’s at all necessary for the filthy nouveau riche to go overboard and paint the inside of their houses with gaudy colors and make it look like they have no taste at all. They may have the money, but they don’t necessarily have the taste to go with it. Money buys just more money; it doesn’t buy you a savvy bit of know-how in the décor stakes. Although, you should be able to pay for someone that does have the knowledge to get you to that.
Whatever they do with their money, the Chinese nouveau riche are working their way up the Forbes rich list.
• China saw a 25% increase in the 2014 Forbes list with 1**52 billionaires**.
• There were only 122 in 2013. Poor things!
• According to Forbes, the list had nearly zero people from China just two decades ago. Although, it’s debatable whether they were actually there or not. The party must have had a few even back then hidden away somewhere.
• Admittedly, the Chinese economy might be slowing down, but it’s still doing a lot better than the rest of us, whether we like that or not.
• Growth for 2013 stood at 7.7%.
It is interesting to note that statistics are always revealing of who actually does them. The Hurun Global Rich List states that there are 358 billionaires in China. Someone must be getting it wrong somewhere along the line. There are 457 ethnic Chinese that are resident outside of the PRC. But, it's noteworthy that Hurun is sponsored by the Chinese luxury property sector and in particular Star River Property. The data seems just about as reliable as anything that gets published by the Chinese state, these days.
According to Forbes, the richest person in China is now Wang Jianlin, coming in only at 64th place in the ranking, with a net worth standing at $15.1 billion. That is worth a lot more in Purchasing Power Parity there in the People’s Republic of China than the rest of us combined ever get hold of in the west.
• Jianlin owns 85 shopping plazas across the country and 51 five-star hotels as well as dozens of department stores.
The second richest person in China is the $13.4 billion Ma Huatent, CEO of Tencent Holdings. The youngest billionaire that has just entered the rankings is 24-year-old Perenna Kei from Hong Kong.
But, before the USA starts worrying that the Chinese are overtaking them, it’s not going to happen just yet. There are 492 of them in the US today and they can either thank their lucky stars, or the hordes of workers that drudge into the offices and the factories every day or the fact that the financial market has been jacked up so much with bubble-inducing drugs that they have added more money to their coffers.
Europe came in a close second (as usual?) with 468 billionaires in 2014.
The world’s richest in ascending order from tenth to first place are:
• Jim Walton $34.7B USA
• Christie Walton $36.7B USA
• Sheldon Adelson $38B USA
• David Koch $40B USA
• Charles Koch $40B USA
• Larry Ellison $48B USA
• Warren Buffet $58.2B USA
• Amancio Ortega $64B Spain
• Carlos Slim Helu $72B Mexico
• Bill Gates $76B USA
Just a thought? I wonder how many of them actually pay tax? Or if they manage to get around all of that by some wicked web that has been woven. One thing tells me that if they are officially worth that much, then one they might not have that in the bank at their disposal. Secondly, they might well have double that amount. People never declare what they have or own down to the last dime, do they? The 11th person on that rich list is Liliane Bettencourt, heiress of L’Oreal. Back in 2011 she got around paying more than 4% in tax on her wealth. She now has $34.5 billion somewhere (officially), although she has got herself embroiled in a scandal with ex-President Nicolas Sarkozy about illegally financing his election campaign and in return (so the rumor goes) getting out of paying any tax altogether.
Is that the way the Chinese billionaires will be going? If they really want to be like the West, they’ll have to go down that road, if they haven’t done so already.
Originally posted: Chinese: Filthy Rich
While Canada may have bitten the hand that feeds it real-estate bubble, one of London's biggest real-estate investors says that even if sanctions were imposed against the Russian oligarchs, London property prices will continue to soar. The average London "flat" could fetch GBP36 million by the middle of the century, and is therefore a bargain now, Hugh Best advises clients. His reasoning is impecable, "the average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable. They have been growing at that level for 40 years and we see no reason for that to change." With two-thirds of new homes in London sold to investors, they are all driving up prices and "the Russians are only a part of it... and the Ukrainians might come with their money."
You may think a shoebox-sized flat in central London costing more than £1m is an insane illustration of a property price bubble, but it could be the bargain of the century.
According to projections by one of the biggest investors in "prime" property in the capital, that average flat could fetch £36m by the middle of the century – if its predictions of 9%-a-year growth in prices become reality.
Casting aside concerns that Russian oligarchs will no longer be sheltering their billions in luxury mansions, London Central Portfolio has launched a £100m fund to buy one- and two-bed apartments in the capital's most exclusive districts.
Hugh Best, LCP's investment director, said: "The average price in prime central London is now £1.5m, and has been growing at 9% a year, which we think is firmly sustainable. They have been growing at that level for 40 years and we see no reason for that to change."
The Crimea crisis would not halt London property's inexorable rise, said Naomi Heaton, LCP's chief executive. "The Russians are only a part of the market and have been dwindling in number over the past few years … we could instead have the Ukrainians coming in with their money. London is the destination for the high net worth community of the world, and we are only just beginning to see the mainland Chinese. The loss of some Russian oligarchs is not a fundamental loss for the market."
So buy, buy, buy...
Submitted by Lance Roberts of STA Wealth Management,
Earlier this week I discussed the expectations for an increase in reported earnings of 50% over the next two years:
"Currently, according to the S&P website, reported corporate earnings are expected to grow by 20.26% in 2014, and by an additional 20.28% in 2015. In total, reported earnings are expected to grow by almost 50% ($100.28/share as of 2013 to $147.50/share in 2015) over the next two years."
However, as I also noted, the rise in corporate profitability has come from accounting magic and cost cutting along with a healthy dose of share buybacks. Since there is "no free lunch," the drive for greater corporate profitability has come at an economic expense. Since 1999, the annual real economic growth rate has run at 1.94%, which is the lowest growth rate in history including the "Great Depression." I have broken down economic growth into major cycles for clarity.
As I discussed previously:
"Since 2000, each dollar of gross sales has been increased into more than $1 in operating and reported profits through financial engineering and cost suppression. The next chart shows that the surge in corporate profitability in recent years is a result of a consistent reduction of both employment and wage growth. This has been achieved by increases in productivity, technology and offshoring of labor. However, it is important to note that benefits from such actions are finite."
The latest report on unit labor costs and productivity produced the following two charts which underscore this point and suggests that the current rate of economic growth is unlikely to change anytime soon.
I stated previously, that in in 2013 reported earnings per share for the S&P 500 rose by 15.9% to a record of $100.28 per share. Importantly, roughly 40% of that increase occurring in the 4th quarter alone. The chart of real, inflation adjusted, compensation per hour as compared to output per hour shows a likely reason why this occurred. The sharp increase in output per hour combined with the sharp decline in compensation costs is a direct push to bottom line profitability.
However, it was not just a decrease in compensation costs but in total labor costs as well which includes benefits and other labor related costs. This suggests that the drop off in hiring in the 4th quarter was more than just "weather" related.
Labor costs are one of the largest detractors from net profitability on any income statement. The problem with cost cutting, wage suppression, labor hoarding and stock buybacks, along with a myriad of accounting gimmicks, is that there is a finite limit to their effectiveness.
I say this because of something my friend Cullen Roche recently pointed out:
"We’re in the backstretch of the recovery. We’re now into month 47 of the current economic recovery. The average expansion in the post-war period has lasted 63 months. That means we’re probably in the 6th inning of the current expansion so we’re about to pull our starter and make a call to the bullpen. The odds say we’re closer to the beginning of a recession than the beginning of the expansion. That puts the Fed in a really odd position and not likely one where they’re on the verge of tightening any time soon."
This is a very important point. While the Fed's ongoing interventions since 2009 have provided support to the current economic cycle, they have not "repealed" the business cycle completely. The Fed's actions work to pull forward future consumption to support the current economy. This has boosted corporate profitability at a time when the effectiveness of corporate profitability tools were most effective.
However, such actions leave a void in the future that must be filled by organic economic growth. The problem comes when such growth does not appear. With the economy continuing to "struggle" at an anaemic pace, the effects of cost cutting are becoming less effective.
This is not a "bearish" prediction of an impending economic crash, but rather just a realization that all economic, and earnings, forecasts, are subject to the overall business cycle. What the unit labor costs and productivity report suggest is that economic growth remains very weak. This puts current forward expectations of accelerated economic and earnings growth at risk. With asset prices extended, valuations rich and optimism at extremes, such a combination has historically become a rather toxic brew when exuberant expectations fail to align with reality.
We are watching key miners and industrial metals plays and see a set up as US data recovers adding to support from spot prices.
Off the top, Universa's Mark Spitznagel explains that "high-frequency traders are making markets more jumpy" and the idea of HFT as a liquidity provider is a fallacy since as he notes "that liquidity won't be there when they most need it," especially when there is one-way order flow such as in the flash crash.
Spitznagel then crushes the 'cash on the sidelines' meme but explaining that while corporate cash balances have soared, net debt has actually gone up beyond the highs of 2008. As we have previously discussed, "the idea that corporate balance sheets are so strong right now is entirely wrong," as investors are conveniently focusing in one piece of the balance sheet (assets not liabilities).
Maria B just can't fathom it but Spitznagel's words are clear - scale the cash on the balance sheet against debt and we are as bad as we were in 2008.
US companies are carrying far more net debt than in 2007
Another curiosity is this notion that US companies have substantially reduced their debt pile and are therefore cash rich. The latter is indeed true. Cash and equivalents are at historically high levels, but rarely do those who mention the mountains of corporate cash also discuss the massive increase in debt seen over the last couple of years.
In fact, debt levels have been growing to such an extent that net debt (i.e. excluding the massive cash pile) is 15% higher than it was prior to the financial crisis.
At 3:00 in the clip below, Spitzangel explains as succinctly as we have heard why the Fed's actions are crushing the Capex growth hopes... when interest rates are so artificially low, "we get more impatient" and scramble "doing stupid things" to make what feels like a natural return (despite the Fed's unnatural thumb on the scales).
Watch the latest video at video.foxbusiness.com
US corporates saw profit growth slow to almost zero last year and on an EBIT basis it has been flat for some time now. Earnings quality, rather than improving is actually deteriorating, as indicated by the increasing gap between official and pro-forma EPS numbers. As a consequence, following a long period of overspending and in the absence of a strong pick-up in demand, corporates will have to spend less and not more.
Finally, as a consequence of such anemic growth, corporates have been gearing up their balance sheets in an effort to sustain EPS momentum via the continuing use of share buybacks. With markets up substantially in 2013 executing those share buybacks has become increasingly expensive. Little wonder companies have to borrow so much to continue executing them.
With Ukrainians living in the Crimea region voting to join Russia, the West calling for sanctions (well some of the West), boots still on the ground, and markets apparently of the belief that all is well in the world once again, we thought the Russian perspective on the next steps was useful...
Via Sergei Markov of The Moscow Times,
The current crisis is not about Crimea. It is about the rights of Russian-speakers throughout Ukraine whom the Kremlin wants to protect from violence and discrimination. Russia does not want a military intervention in Crimea and does not want to take Crimea from Ukraine.
There is a political solution to this crisis.
First, create a coalition government in Kiev composed of all parties, including those from the east and south of the country. The current government is dominated by anti-Russian extremists from western Ukraine.
Second, Ukraine needs to draft a democratic constitution that has guarantees for Ukraine's Russian-speaking population that would grant official status to the Russian language and establish the principle of federalism.
Third, presidential and parliamentary elections must be held soon. Independent election observers must play an active role in ensuring that the elections are free and fair. There is a real danger that they will be manipulated by the neo-Nazi militants who de facto seized power in a coup.
If these democratic and peaceful solutions to the crisis in Ukraine are rejected by the opposition forces that have seized power in Kiev, I am afraid that Russia will have no other choice but to revert to military means. If the junta leaders want to avoid war, they need to adopt Moscow's peaceful and democratic proposals and adhere to them.
Those currently in power in Kiev are carrying out a political strategy that is not so much pro-European as it is anti-Russian, as evidenced by the surprisingly heavy-handed tactics the U.S. and European Union have employed in Ukraine. In the end, a minority executed a violent coup that removed the democratically elected and legitimate president of Ukraine.
The Kremlin believes that the current Ukrainian leadership will manipulate the elections planned for May 25 to install a single leader or coalition government functioning much as former Georgian President Mikheil Saakashvili did in Tbilisi. A "Ukrainian Saakashvili" will unleash an even more repressive campaign of intimidation against Russian-speakers, one that over several years would stoke anti-Russia hysteria among the general population.
After that, Kiev may evict Russia's Black Sea Fleet from Sevastopol and purge Crimea of any Russian influence. Ukraine could easily become a radicalized, anti-Russian state, at which point Kiev will fabricate a pretext to justify taking subversive action against Moscow. This looks especially likely considering that ruling coalition members from the neo-fascist Svoboda and Right Sector parties have already made territorial claims against Russia. They could easily send their army of activists to Russia to join local separatists and foment rebellion in the North Caucasus and other unstable regions in Russia. In addition, Russia's opposition movement will surely want to use the successful experience and technology of the Euromaidan protests and, with the help and financial support of the West, try to carry out their own revolution in Moscow. The goal: to remove President Vladimir Putin from power and install a puppet leadership that will sell Russia's strategic interests out to the West in the same way former President Boris Yeltsin did in the 1990s.
The official census puts the Russian minority in Ukraine at 16 percent of the total population, although that number was falsified. The actual number is closer to 25 percent. Surveys indicate that 45 percent of the country's population speak Russian at home, 45 percent speak Ukrainian and 10 percent speak both languages. In the most recent Gallup survey, when asked in which language they would like to be polled, 83 percent of respondents chose Russian. Taking into account the rural population in western and central Ukraine, about 75 percent of the people, probably speak Russian. Of that 75 percent, only about 10 percent are those in Kiev and a few other major cities who supported the protests. This means that only 35 percent of the population are attempting to impose its will on the remaining 65 percent, using a violent coup to achieve their goals.
Putin made the right decision: He did not to wait for that attack and took preventative measures. Many in the West say the Kremlin's reactions were paranoiac, but Germany's Jews also thought the same of leaving the country in 1934. Most of them chose to believe they were safe and remained in Germany even after Hitler came to power. The infamous Kristallnacht took place five years later, one of the first early chapters in the "Final Solution." Similarly, just four years remain until Russia's presidential election in 2018, and there is a strong risk that subversive forces within and outside Russia will try to overthrow Putin, in part using their new foothold in Ukraine.
Will there be war in Ukraine? I am afraid so. After all, the extremists who seized power in Kiev want to see a bloodbath. Only fear for their own lives might stop them from inciting such a conflict. Russia is prepared to move its forces into southern and eastern Ukraine if repressive measures are used against the Russian-speaking population or if a military intervention occurs. Russia will not annex Crimea. It has enough territory already. At the same time, however, it will also not stand by passively while Russophobic and neo-Nazi gangs hold the people of Crimea, Kharkiv and Donetsk at their mercy.
Or out another way:
If the extremists who seized power in Kiev do not accept Russia's democratic proposals, Russia will likely be forced to revert to military means to solve the crisis in Ukraine.
Dow Transports surge almost 1% as Nasdaq and many of the momo names started to weaken. The S&P closed at new highs once again despite weakness in HY credit market and a rising VIX on the day. Started by Draghi, EUR strength implied USD weakness and the greenback gave back the week's gains and then some (as AUD is up 1.8% on the week). USDJPY topped 103 - supporting the S&P. Treasury yields continue to push higher (with 30Y +10bps on the week). Gold and silver recovered their Putin losses as the formers ends above $1350. Oil prices tanked all day (testing $100) but reversed hard on chatter of escalation in Ukraine. It seems more than a few traders were hedging into tomorrow's payrolls number with VIX rising and stocks tumbling into the last few minutes (not helped by chatter of a Russian invasion overnight).
USDJPY 103 holds the S&P at record highs...
On the day, Trannies were top, Nasdaq bottom with the S&P pushing new highs once again...
MoMo names surged at the open then drifted...
The last few days have seen credit and vol disconnect from stocks...
Credit markets didn't buy it...
Treasuries were sold all day; 30Y now +10bps...
The US Dollar slid led by EUR and AUD strength...
Gold and silver surged back above pre-Putin levels and oil dropped auntil it spiked in the afternoon (on chatter of war escalation in Ukraine)...
Perhaps the most worrying thing about today is the "most shorted" stocks dumped (providing yet more free ammo for this idiot market to rally to new newer highs)...until it doesn't of course
Bonus Chart: Deja Vu all over again...
By: Mark Wallace at
This is the question on the mind of many a gold share "bug." I can say with relative certainty that the answer is YES. Why? I think the reason should be fairly obvious. Everything moves in cycles.
As we've discussed ad nausea within these pages, gold has had a dismal few years. In 2011 gold hit a high of around $1,900 USD per ounce, fueled by easy money and fears of a currency debasement. Money printing continues to this day, but the dollar is alive and well. As of December 2013 gold sat below $1,200 USD per ounce. Silver fared worse yet, declining from almost $50 USD per ounce, to under $20 USD per ounce.
When we look at the gold mining equities it's really ugly. The NYSE Arca Gold Miners Index lost about 70% of its value in that time frame. Many junior companies lost 90% plus, and some just blew away like so much pixie dust in the wind.
Chris and I were casualties of this decimation ourselves. Most of our junior stocks, and almost all of our recommendations related to anything gold/silver were just taken out back and shot. Plain and simple.
In general though 2013 was a bit of an anomaly, in that gold declined while the broader equity indexes rose substantially. Over the past 13 years prior, gold had outperformed equities. With the decline in gold it's no surprise that gold stocks got clobbered so badly, as the fundamentals were awful.
Bellwethers like Goldcorp and Barrick Gold had massive losses and reduced reserves in anticipation of lower gold prices. In the last quarter of 2013 Goldcorp lost a whopping $1 billion USD, while Barrick claimed a $2.83 billion USD loss. These "big guys" were forecasting gold could be as low as $1,100 going forward.
As they so often are, the "big guys" were wrong. Gold has risen to $1,335 USD per ounce as I write this, and the stocks of the senior miners have risen over 25% on average. The old axiom, "Buy when there's blood in the streets" seems to have held once again. The time to buy a stock, whether its a resource stock or otherwise, is when they begin rising on negative news. This is precisely what has happened with the miners.
Our very own Brad Thomas put out a Trade Alert to subscribers on Barrick saying the following:
"I continue to hold the view that there will be an ultimate price to pay for all of the unprecedented monetary “stimulus” and money printing that we have observed over the last 5 years across most developed markets. This ultimate cost will be inflation, with a resulting dramatic rise in precious metals.
If ever there was a time to invest in gold stocks now is probably the best time due to a number of factors:
- Sentiment towards gold stocks is exceptionally bearish – how much more bearish can sentiment become
- Given the above it is highly likely that this is the most under-owned that gold stocks have been in a couple of decades, with the result that shares of mining companies are likely to be concentrated in the hands of a relative few - where is the marginal seller of gold stocks going to come from?
- Most gold producers are making losses, which suggests that the cost of producing gold is about $1200 an ounce – how much below the cost of production can gold go before material shutdown of capacity occurs?
- Fundamental valuations are exceptionally low with most of the big producers trading more or less @ book value – are we likely to see any further compression of price multiples?
Why ABX specifically? In essence while the price of gold has continued to fall over the last 8 months, Barrick’s share price hasn’t, which suggests that Barrick’s stock price has probably found a long-term bottom."
Brad recommended the January 2016 $25/$35 spread. With this trade you would buy the $25 option and sell the $35 option. At expiration if ABX was to close:
- Below $26.50 – loss = 100%,
- @ $28.00 – profit of 100%,
- @ $30 – profit of 220%,
- @ $35 – profit of 567% (a maximum profit will be achieved if ABX closes @ 35 or higher).
Taking a look at the weekly chart of ABX, that price level being achieved within the next 2 years looks to be a good bet!
The moral of this story is that the bear market in the precious metals and the associated equities may be coming to an end. The bad news has been delivered, and now we are seeing prices rise. This is likely a new trend forming, with the classic higher lows patterns developing in the individual equities.
Insitutional and retail investors are starting to take notice. Reuters reported on February 27th that, "The world's largest gold-backed exchange-traded fund, New York's SPDR Gold Shares, is on track for its first monthly inflow of metal in more than a year after a run of weaker U.S. data boosted investment interest in gold. The SPDR fund added 10.5 tonnes to its reserves so far this month. That means that, barring a large outflow on Friday, February would be the first month to show an increase since December 2012."
The chart above is courtesy of StockCharts.com and John Murphy, an EXCELLENT technical analyst that I've followed for the last 15 years. According to John, the chart, "Focuses on the two month advance in the Gold SPDR (GLD). With GLD trading near 130, it has retraced just over 62% of the prior decline. Even though the 62% area could mark a reversal zone, the trend since early January is clearly up.
The trend line zone and late February lows combine to mark support in the 126-127 area. The indicator window shows the Commodity Channel Index (CCI) moving into positive territory in early January and remaining largely positive during this advance."
Everything seems to be lining up for gold at this point in time.
Brent Cook, former associate of Eric Sprott and one of the best mining analysts in the world believes that, "2014 should be a good year for investors to begin positioning themselves in the better metal deposits, mining companies, and the most competent explorers. The reason is quite simple: the industry is not finding enough economic deposits to replace mine production.
To further that, Grant Williams, the prolific editor of Things That Make You Go Hmmm, in regards to an impetus for a potential violent upwards move in the gold price has stated, “I fear that it will be a shortage in physical metal because that could be very, very extreme..."
For an excellent timeline of important developments in 2013 that will affect the gold price going forward, I recommend reading Alasdair Macleod's (Gold Money) recent post, Gold in 2013: The Foundation For 2014.
If you want to skip to the conclusion, which by the way we agree with, Alasdair states:
"The events of 2013 persuaded investors in western capital markets that gold's bull market had definitely been broken, and that gold would probably go lower or at best move sideways in 2014. The underlying reality is very different, with China in particular managing to corner the physical market with trend-following Western analysts caught unawares.
So far, instead of continuing to fall the gold price actually bottomed on 31 December at $1182, and since then has rallied over 13% to $1340. The position today is that some hedge funds which were short have closed their positions and there are more yet to do so. There is growing evidence for the trend-chasers that the price is entering a new bull phase, with the 50-day and the 200-day moving averages both rising and about to complete a golden cross.
Central banks appear to be facing a problem of their own making. The lesson from Germany's attempt to repatriate her gold appears to have provided prima face evidence that central banks have little or no physical liquidity left. Minor central banks, such as Finland's, must now be wondering if gold out on lease will ever be returned to them, so may be increasingly reluctant to make their gold available for further leasing. Instead they are likely to end current leasing agreements as they mature rather than extend them.
In 2014 there is likely to be a growing realisation that the vaults in the West are very low on stock."
Turning once again to Grant Williams:
“Gold is a manipulated market. Period.
“2013 was the year that manipulation finally began to unravel.
“2014? Well now, THIS could be the year that true price discovery begins in the gold market. If that turns out to be the case, it will be driven by a scramble to perfect ownership of physical gold; and to do that you will be forced to pay a lot more than $1247/oz."
Well, gold is now well on its way, having risen $100 since Grant penned those words last month. Don't get left behind!
Next week we'll be making a special offer to those who are receiving our FREE Trade Alerts. To get on that list and receive our offer just drop us your email HERE.
"There’s going to be a bubble in gold stocks.” - Doug Casey
On the heels of the Russian navy intentionally sinking a vessel blocking the Ukrainian navy from entering The Black Sea, Ukraine Pravda reports that it is "most probable that Russian troops will assault units in Ukrainian Crimea overnight continuing to the weekend." Citing a source in the uniformed services, Ukraine Pravda warns that "despite reports that Russian troops ended in learning, active phase lasts. They did not return to the barracks," and maintain "peak readiness."
On the night of Thursday to Friday a great opportunity to assault Ukrainian part of the Russian special forces.
This "Ukrainian Pravda" reported a source in the uniformed services.
"Despite reports that Russian troops ended in learning, active phase lasts. They did not return to the barracks. Could maintain peak readiness by the end of the weekend," - said the source.
"The most probable that the assault would take place that night, but the danger will persist to the end of the weekend" - source added.
"There are three scenarios. First - this air strike," - said the source.
He said that if Russian troops will withdraw from parts of the Ukrainian, that would mean this version.
"Helicopters are already relocated, and it is possible that they will do exactly helicopters," - said the UP.
"The second option - a special operations force for disarmament," - he said.
The interviewee said that in the Crimea are Russian special forces "Alpha", "Vympel" and "Zaslon."
"The third option: they can come up with ryazhenymy Cossacks, as with a living shield. Example is happening" - he added.
He also reminded that the Russian troops flooded his ship to block the path of Ukrainian courts.
According to the source, impacts may not be in all parts, but only by those who are the most combat-ready, including Sevastopol and Feodosiya.
And this follows the sinking of a ship to block the Ukrainian Navy...
An anti-submarine boat may have been the first casualty of the Russian incursion into Crimea, but it was hardly an act of violence, much less war: The Russian navy sank one of its own, junked vessels to create an obstacle, a Ukrainian official said on Wednesday.
The sinking was the latest in a series of moves by Russian naval forces in the area that were jangling the nerves of Ukrainian officers... the mouth of the bay was blocked by 10 Russian vessels including the formidable guided missile cruiser Moskva.
The oligarchs have taken over the asylum:
- *UKRAINE $1 BLN LOAN-GUARANTEE BILL PASSED BY U.S. HOUSE
- *HOUSE VOTES 385-23 TO PASS $1 BLN UKRAINE LOAN GUARANTEE
We are sure the auditors will be aggressively checking that this money does not flow directly from the US to Ukraine to Gazprom. But notably, we suspect, Jordan and Tunisia might be pissed as they just lst their funding. Not so much for Detroit or Puerto Rico also...
Measure, H.R. 4152, doesn’t entail any new funding because money remaining in a program for loans to Jordan and Tunisia would be transfered; exact amount of loan guarantees won’t be determined until Ukraine applies for assistance
5 years ago today, the S&P 500 made its post-crisis low at the oddly demonic 666 level. What many may not remember is... the last so-called-at-the-time "secular" bull market lasts exactly 5 years and 1 day (from October 10th 2002 to October 11th 2007)... it's different this time though.
The last "secular bull market"
The current "secular bull market"
h/t Brad Wishak of NewEdge
Of course - nothing changes...
As a gentle reminder: At the end of October 2007, right before markets began their descent to their current lows Cramer gave out investment advice on his wildly popular show, Mad Money.
Here was his game plan at the time:
"You should be buying things and accept that they are overvalued, but accept that they're going to keep going higher.
I know that sounds irresponsible, but that's how you make the money.
Right now, up is down, left is right, peace is war."
Indeed. Just don't look at the following chart...
Submitted by F.F.Wiley of Cyniconomics blog,
In return for speaking fees reported to be “at least” $250,000, Ben Bernanke confessed a few of the Fed’s missteps while speaking to guests of the National Bank of Abu Dhabi on Tuesday:
- “Bernanke says he underestimated impact of subprime problem.”
- “This is going to sound very obvious but the first thing we learned is that the U.S. is not invulnerable to financial crises,” Bernanke said.
- “Bernanke says he thought slowdown would be ‘moderate’.”
Bernanke’s gentle mea culpas had us wondering what kind of confessions we may hear next. It’s probably not surprising that we didn’t have to wait long for clues.
Consider this chart created from the household balance sheet in today’s Flow of Funds report:
As shown, the aggregate equity allocation for U.S. households is now at a level that’s only ever been reached in the Internet bubble years of 1998 to 2000.
This will surely lift spirits at the next FOMC meeting. (Cue the laugh track.) Higher equity allocations are exactly what the Fed tries to achieve with its so-called portfolio balance channel – their jargon for driving up the prices of a few assets by enough that you push investors into other assets (risky assets, such as equity, in the present case).
It doesn’t seem like such a good result to us, though. As we discussed here and here, there are a variety of indicators linking today’s S&P 500 valuation to at least the middle stages of the Internet bubble. Now the household balance sheet puts us right back in, well, the middle stages of the Internet bubble. What could possibly go wrong?
The Fed’s confessions haven’t gone far enough
Getting back to Bernanke’s speech on Tuesday, the conference attendees in Abu Dhabi were told that: “For the future, I’m in a mode of reflection.”
Unfortunately, such reflection – whether by Bernanke or his former colleagues still at the Fed – only extends so far. The Fed’s basic beliefs and workings are clearly sacrosanct, no matter how many times they fail. And as long as that continues to be the case, expect current and future Fed Chairs to follow Bernanke’s lead and draw up a list of boom-bust blunders shortly after leaving office. They can then offer a first-hand reading sponsored by large financial institutions at $250,000 a pop. It’s nice work if you can get it.
Yesterday we reported that with the US aircraft carrier, CVN-77 George H.W. Bush, anchoring in Piraeus, Greece, an unnamed US warship had been granted permission by Turkey to cross the Bosphorus and enter the Black Sea. There was speculation it may be the carrier itself, even though such a crossing would be forbidden by the Montreaux Convention. Today we have the answer: it is not CVN-77, but one of the ships from its aircraft carrier strike group - the guided-missile destroyer USS Truxton, which as the clip below shows, just departed the Greek port of Souda Bay earlier today.
A U.S. guided-missile destroyer is bound for the Black Sea in what the Navy calls a routine visit unrelated to events in Ukraine.
The USS Truxtun, an Arleigh Burke-class destroyer with about 300 sailors on board, departed Greece early Thursday, said a spokesman for U.S. Naval Forces Europe-Africa in Naples.
The Truxtun is part of the George H.W. Bush Carrier Strike Group, which recently entered the Mediterranean and is training with regional navies before continuing to the Middle East. The group also includes Carrier Air Wing 8, the destroyer USS Roosevelt and the cruiser USS Philippine Sea.
But lest someone think that just like Russia's ICBM test coming at a most inopportune time, this move has anything to do with Ukraine tensions, the US Navy would like to frame the situation in a far more amicable manner:
The ship is scheduled to train with Romanian and Bulgarian naval forces for an unspecified period of time, conducting joint maneuvers and landing aircraft on ships. The spokesman, Lt. Shawn Eklund, said the visit is unrelated to Russia’s recent incursion into Ukraine. "Truxtun’s operations in the Black Sea were scheduled well in advance of her departure from the U.S.,” he said.
Well of course they were. But just in case not sending a missile destroyer into the Black Sea would be seen as a way to avoid escalations, it is best to make sure such confusion is avoided entirely.
For a brief glimpse of the truth behind the real purpose of this trip, we also find the destroyer will join the USS Taylor as the only two U.S. vessels inside the Black Sea during a period of heightened tensions. A a reminder, the Taylor, a guided-missile frigate, remains moored in Samsun, Turkey, after it ran aground in February - good thing it did not have to defend the "free world" from all those Sochi terrorists that America was convinced will blow everything up.
So what does a ship departing for the Black Sea for what may or may not be simple drills with friendly naval forces? The answer can be found in the clip below.
It would appear the Norwegian Nobel Institute is starting to lose it. Just a few years after President Obama won the Peace Prize (while mired in overseas wars), the director of the prestigious entity announced today that Russian President Vladimir Putin, accused of invading Ukraine - suspiciously un-peaceful action - has been nominated for the Peace Prize. Putin joins NSA whistleblower Edward Snowden and Pakistani schoolgirl Malala Yousafzai as a nominee for the award to be announced in October.
Putin is thought to be on the list, since Russian figures proposed his name in October, citing his role in the Syrian crisis.
The former KGB agent is credited with averting a US attack against Syria by suggesting putting Bashar al-Assad's regime's chemical weapons arsenal under international control.
But, as HuffPo notes,
In order to secure a spot on the list, essentially all that's required is for a group or individual who falls under the broad criteria set by the Nobel Committee to formally submit your name and good deeds. The committee then selects from these nominations, but takes no responsibility for the pool of candidates they choose from.
This process has resulted in some truly terrible people being proposed over the years, including but not limited to: Joseph Stalin (twice), Adolf Hitler (as a protest), and Rush Limbaugh. Putin was also nominated last year and faced similar criticism as today.
Just need a few more invasions and should be a lock...
Question Everything, Believe Nothing
Group Think and the Hive Mind
There is a pretty common ‘belief’ among many that to ask questions of some ‘things’ that others consider settled or ‘true’ is a sign of weakness, of someone who is weak minded, indecisive or one who just can’t be trusted when the nitty gets gritty. They ‘believe’ that the very act of questioning something that is obviously correct implies instability, doubt, hesitation, uncertainty, etc. They ‘believe’ that these people, the shameful Doubting Thomas’s, cannot be trusted and must be viewed with suspicion and distrust. You are either with the herd or you are against the herd.
Group think is most prevalent in the conditioned mind, a phenomenon that is completely invisible to the group members who truly believe they are thinking independently. The irony of group think is that each member is afforded just enough wiggle room with which to modify or mold the groups common ‘beliefs’ so that each member can call it their own original thinking. Does this sound familiar? No two members of the same political party are of exactly the same mind, yet they all pull the same political lever as one with the herd.
The hive mind is most certainly capable of great feats of strength and perseverance precisely because it is narrowly focused and of ‘one mind’. A common argument in favor of the hive mind is the great feats of human engineering that are part of our daily life. I do not argue that the results can be quite spectacular. In fact I am somewhat of an engineering geek and marvel at today’s ships, planes, bridges, buildings, technology and so on.
But I do not accept the premise that these co-created ‘things’ would only be possible under the direction and control of the coordinated hive mind. From my point of view it is a marvel that they actually exist considering all the truly cruel and destructive effects of the hive mind. War and genocide come to mind as something that can only be accomplished by way of group think and the hive mind.
This state of mind is the antithesis of awareness and perspective, of true compassion and empathy, the act of actually transferring yourself emotionally and spiritually into someone else’s shoes rather than simply believing yourself to be in their shoes. Believed empathy is telling someone you feel their pain dawg. True empathy is doubling over in pain and nausea as wave after wave of the shared agony crashes over you.
Those who claim they have a flexible mind often have the least and those who worry they don’t have enough flexibility usually have the most. The same applies to those who ‘believe’ they have questioned their beliefs enough and found them sound, and those who continuously question what they believe precisely because there appears to be no doubt. There is nothing more certain than the certainty that our perception of reality has been seriously distorted and we do not, and cannot, perceive clearly now.
Personally I have no substantial problems with questioning certain fundamental ‘truths’ that I have believed in the past were unassailable, yet still carry them with me to use until I have something better to replace them with………or I just decide to discard them altogether. Rather than flee in terror from this Cognitive Dissonance because it might undermine the very basis of my existence, I welcome the opportunity to cast off the binds that tie my mind to the hive.
For the hive mind though, this is a true paradox that sends the mind reeling and the stomach spinning. Having never begun an inward journey to locate the true source of their power, or if so, then quickly abandoning it as obviously too dangerous to the ‘self’ to continue, ‘certainty’ is the only force that group think has to propel itself forward. Remove that and the mind freezes, the body falters and the resolve quickly melts away.
For the conditioned mind there is no other fuel source to tap other than those resources supplied externally by group think and the hive mentality. This is why any approach to life other than slightly modified group think is seen as dangerous to the hive’s existence and must be repelled at first sight and expelled if found to already exist. Independent thought, let alone action is as dangerous to group think and the hive mind as Gold or any other ‘real’ substantial foundational basis is to ‘faith and belief’ central bank fiat.
To question everything and believe nothing is not an all or nothing proposition, a dead ended process of a lost soul endlessly chasing its own mind. To the contrary it is a fearless moral, spiritual and emotional self examination, an inner exploration that yields as much, if not more, from the process of journeying than from actually arriving at any particular destination. In fact if one allows their ‘self’ to believe they have actually arrived at enlightenment, most likely they are standing face to face with their carefully concealed ego.
Here’s the rub though. How does one even achieve enough sanity to begin questioning everything while simultaneously surrounded by, and interacting with, an insane world? Worse, how can we trust anything we might discover when we have finally accepted that deliberate deception runs ten layers deep and we haven’t even penetrated level one?
The question is similar to walking into a clothing store and not knowing your size or even what you like. What do you do? The answer is simple; proceed slowly and try on many different garments for size, shape and feel. Most of all trust your intuition and gut. Equally important, before starting, be settled in the knowledge that you will make many mistakes and that this is entirely expected. Navigating a maze while blindfolded is not an easy task and managing your own expectations and disappointments is paramount to moving forward.
As well, we must recognize that because we were conditioned from an early age, a time when our vulnerability was the greatest because we had no real ability to differentiate between programming, propaganda and believed ‘truth’ (nor did most of our familial programmers), we enter this examination process with our cup full of beliefs and our mind convinced in ways we haven’t even begun to explore that there are unassailable truths. These ‘unassailable truths’ are thus the most difficult to question, let alone shake, and shouldn’t be the first to be challenged.
While our ego might insist we charge directly into the valley of death, understand that the ego, the supreme expert in the manipulation of our ‘self’, is sending us into a psychological trap, a sort of reverse psychology deception by luring us in with false bravado and confidence, only to put us at cliffs edge staring down into the black abyss.
Having little to no experience in these matters, many (including myself on several occasions) are quickly overcome by vertigo and scurry back to the safety of terra firma and our familiar self deceptions. Knowing what we have just done, our ego, the master puppeteer, then skillfully encourages us to bargain with what we have just seen to assuage our shame and remorse and to settle for just another comforting version of the original lie.
Instead of pealing back another layer of the onion, tragically we have successfully added yet one more deposit, this time deeply set in stone by our own frightened hands. If we ever venture back down this path again this self created monolith will mock us in ways we can only imagine. Best to travel carefully as if walking a crumbling sandstone path then to delude ourselves into thinking we are surefooted mountain goats.
How arrogant we are to think we could quickly and easily challenge decades, centuries, of pre-conceived group think notions, ‘beliefs’ really since they can be termed nothing else without a thorough examination, without losing our footing and skinning our knees or (perish the thought) breaking some cognitive bones.
I remember well the cold sweat that formed on the back of my neck when I realized I had been criminally deceived into believing the ‘official’ story of nine eleven. Why then, after such a disorienting blow to the egoic mind, would I not expect whiplash when the dawning realization finally sweeps over me that I actually enabled The Big Lie, that I wasn’t quite the helpless victim I had comfortingly conceptualized?
The cognitive problem is never a difficulty in learning about new people, places and things, but in letting go of the old ‘certainty of belief’. We are attracted to the perceived ‘order of certainty’ because our conditioning compels us to seek it out precisely because that empowers outside forces, external author-ities (those who create or ‘author’ their own right to receive/take our power) to supplant our own inner knowing. By rejecting the certainty of belief we are confronting the complete ‘self’ destruction, a rebuilding from the foundation up and then the reordering of all that we ‘believe’ constitutes ‘me’.
Once the curtain is pulled back just a smidge to expose the wizard and his motley crew, our world begins to fly apart as if ravaged by centrifugal forces greater than the human mind can withstand. It is ‘we’ who find ourselves swimming naked when the tide goes out. Worse, we are the gravitational force that determines when, and if, the tide actually ever recedes. The pain we feel when balanced at the cliff’s edge is entirely of our own making and completely within our control to extinguish. All we need do is to abandon the certainty of belief that is presently stuck in our craw.
Our identity, our ‘self’, our very basis, all that we think ‘we’ are, is called into question when we seriously question everything, then look within for some real honest answers. It all comes back to one of the questions I posed at the beginning of this piece. Who, or more accurately, what are ‘you’ if very little of substance differentiates ‘you’ from ‘us’? This is the stark reality we face when we find ourselves beached naked as a jay bird after being blissfully ignorant nearly our entire life.
Consider just for a moment that we carry around with us, on our backs if you will, a huge pack stuffed to the gills, crammed with all our suppositions, assumptions, beliefs and precious ‘truths’ we hold so dear to ‘us’. That in a nut shell pretty much describes each one of us once we are released from the primary school indoctrination machine, competently instructed in the ways of the beast (these days more like trained as disposable shock troops) and ready to make our mark upon the ‘real’ world.
Now consider how much more that backpack has been stuffed after twenty or thirty years of ‘real’ life experience and imagine what a burden, what an absolute impediment, it must present to real substantial organic growth, the type that nourishes from within, that frees the mind and spirit rather than furthers our enslavement.
Is it really so hard to recognize that ‘belief’ is just another tool we may use, one of dozens we can employ at any time we wish to transport our ‘self’ from one way station to the next as we work our way through life? Instead, when unsettled or directly challenged, we desperately grasp for our beliefs with the ferocity of a drowning swimmer, our backpack clutched to our bosom with a death grip, certain beyond belief that we are identified by our beliefs rather than condemned by them to be chained to a life of spiritual stagnation and decay on every level. Either we sink to the bottom firmly anchored to the herd’s beliefs or we rise to the surface and beyond buoyed by true freedom of thought, mind and conscious spirit.
If I were to hold my hammer, chisel or even my chain saw with the same death grip I hold my beliefs I would soon find myself maimed for life, if not pushing up daises six feet under. Fortunately any and all damage done by the mishandling of my beliefs by my ‘self’ can be undone in mere minutes with a decision born of desperation or determination, it matters not, that I am not my beliefs, that it is my beliefs that control me and not the other way around.
This is why it is advisable to hold the contents of my backpack as I would a butterfly rather than the anvil it so often is. If I view my certainties as fragile and fleeting rather than anchored and immovable, much less effort is required when displacing one for another. Or better yet, to simply discard as no longer need or wanted, as outmoded and useless, what previously I could not imagine living without. Cut the ties, one by one, that binds our mind to the hive. This is the true genesis of substantial original organic life fulfilling growth.
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Submitted by Simon Black of Sovereign Man blog,
President Obama released his 2015 budget proposal this week… and as expected, it contained even more language about his MyRA initiative.
As we’ve discussed so many times in the past, IRAs are an irresistible kitty for such a bankrupt government.
The US government itself estimates that over $5 trillion is tucked away in American retirement accounts.
They need that money. Your money.
Think about it– the Chinese are starting to dump their US Treasuries in record numbers. The Social Security trust fund is also on track to start dumping Treasuries in order to pay out record numbers of retirees.
The US government is struggling to come up with new funding sources… and retirement accounts are by far the easiest target.
Why? Because the majority of retirement accounts at trapped at big Wall Street banks, which are all de facto agents of the government. All the Treasury Department has to do is make a phone call.
Of course, they’ll claim that it’s for your own good. I suspect they’ll wait until there’s a big stock market crash and then say “We must protect Americans from such risky investments. And that’s why today we are requiring these banks to invest a portion of the retirement accounts they manage in the safety and security of US government Treasuries.”
A few weeks ago in his Sad State of the Union address, President Obama announced this MyRA program– a new initiative that will “help” Americans invest directly in US Treasuries.
Then he looked everyone in the eye and said, “These accounts will never go down in value…”
Naturally. How could loaning money at rates which don’t even keep pace with inflation to a country that has racked up more debt than any other nation in the history of the world possibly pose a risk?
After announcing MyRA, Mr. Obama took to the streets, and his team took to the media… flooding newspapers and airwaves with MyRA propaganda.
Yesterday’s budget announcement constitutes the next phase: automatic enrollment.
And I suspect that, just like Obamacare, there will soon come a time when it will become MANDATORY to have some sort of retirement plan set up, naturally with the government option at people’s fingertips.
This isn’t some far-fetched conspiracy theory. In fact, it’s already happened in so many countries over the last few years– from Argentina to Ireland to Poland.
In fact, even the Treasury Department grabbed government pension funds at least three times since 2011 in order to plug temporary funding gaps.
The Federal Times, a publication for senior government managers, ran a story back in 2011 entitled “Treasury raids your pension – but don’t worry, Geithner says”.
This idea is no longer theory or conjecture. It’s happening, and the conclusions are all supported by the data.
Anyone who thinks ‘that will never happen here’ is really fooling themselves… and playing very dangerous games with their hard-earned savings.
The powers-that-be often use agent provocateurs to disrupt protests and paint protesters as violent and unlikeable.
For example, violent provocateurs were deployed:
- At the G20 protests in London
- In Cairo
- At the Occupy protests
- In Burma
- And in many other places
There is a related type of false flag operation commonly used to create chaos and discredit regimes or protesters: snipers.
- Unknown snipers reportedly killed both Venezuelan government and opposition protesters in the attempted 2002 coup
- Unknown snipers fired during Thailand’s 2010 protests
- Unknown snipers allegedly have created bedlam in Syria
- And the Estonian foreign minister claims that the new Ukranian coalition deployed snipers to discredit the former government of Ukraine
Brutal … but effective and cheap.
Because it doesn’t cost much to hire one or a handful of snipers to access rooftops or bridge overpasses, create chaos, and then quietly disappear.
Another quarter down, and another $3 trillion in net worth added.
On the surface, the increase in household net worth to a record $80.7 trillion is good news. The problem is that with $2.5 trillion of thie $3 trillion purely thanks to an increase in financial assets, which as has been made quite clear over the past several years, benefit only the 1%, what the lede should say is "another quarter down, another $3 trillion added to the net worth of America's richest." Put another way: of the $94.4 trillion in total assets (gross, not excluding $13.8 trillion in household liabilities), a record 71% or $66.9 trillion, is in financial products. And now you know why the Fed can not possibly allow any hiccups on the road to trickle down Fed balance sheet nirvana. If only for the 1%.
The breakdown of the household balance sheet by quarter based on the just released Z.1 Flow of Funds statement is shown below.
A snapshot of the household balance sheet as of Q4.
With Western condemnations rife, bailouts ready to flow, US F-16s on the ground in Poland, Crimea voting to join Russia, and allies pulling back from sanctions, we anxiously await President Obama to explain his next steps and just what will trigger them...
Speech due to begin at 1:05pmET...