Pre Fedlines Open Thread

267
Wed, Sep 18, 2013 - 10:24am

Only about 3.5 hours to go before all the fun starts. Here's a thread to get you ready.

Just two charts so that we're all on the same page. Again, once we broke down last week and then closed below $1320, it became clear that a minimum downside was somewhere near $1270. Might we see that later today? I hope not but it's certainly NOT out of the question.

The main item of interest, though, is the obvious attempt to hammer price last evening. When this type of move is employed by The Forces of Darkness ahead of the news event, it's almost always a fakeout. Why? Because the bullion banks, as agents of the central banks, likely already know the outcome. By crashing price, they are attempting to draw in as many fresh Spec shorts as possible, into which they cover and BUY. We saw this identical pattern back on 9/5, the day before the latest BLSBS release. We'll see how it turns out this time but, I must tell you, last night's action makes me quite optimistic about the ultimate outcome of today's craziness.

One more thing...For subscribers, this weeks Access2Access event has been scheduled. It will be a webinar with Andy Hoffman of Miles Franklin. Just like last week, participants will be able to submit the questions and Andy will answer them live during the presentation. If you want to be a part of it, you can register by clicking here: https://attendee.gotowebinar.com/register/6634276493783303426

Have a fun day!

TF

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Sep 18, 2013 - 11:25pm

Random Viewing (6)

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BBC Richard Hammonds Invisible Worlds S01E03 720p BluRay
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Robski
Sep 18, 2013 - 11:17pm

A storm is coming, our storm,

Dune - Our Time Has Come. Long Live The Fighters!

Long live the stackers!

Human MushroomSo It Goes
Sep 18, 2013 - 11:11pm

Makes you wonder, doesn't it?

How JPM got into their long position in gold before this FOMC announcement? I wonder if JPM managed to exit any of their silver short positions during this past week of PM declines. Nah. I'm sure JPM didn't know anything, just a coincidence probably. Terry

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Sep 18, 2013 - 10:52pm

More on China - The Yuan & Free Trade Zones

Luxembourg Launches Website for Tracking Yuan Business

Step is part of effort to build the small European country into a fully fledged cross-border center for trading the Chinese currency By staff reporter Wang Yuqian

RELATED:

  • (Beijing) – Luxembourg took its ambition to develop an offshore yuan center a step further on September 16 by launching a website dedicated to tracking and facilitating the development of the Chinese currency business in the European country.

The website, www.rmb-business.com, was developed as part of an initiative led by the Luxembourg Ministry of Finance to explore yuan business opportunities and build the country into a fully fledged cross-border yuan center, according to the announcement by Luxembourg for Finance, an organization created to support financial development.

The website is in English, but a Chinese version will be available soon. Its job is to provide regular updates on the development of yuan business in Luxembourg and related research results and press coverage, the announcement says.

Luxembourg leads all other European countries in terms of yuan-denominated deposits, loans and trade finance, the announcement says, citing data from global auditor PricewaterhouseCoopers.

The data shows that, as of the end of June, the amount of deposits and loans in Luxembourg was 39.9 billion yuan and 61.9 billion yuan, respectively. The volume of yuan trade finance in the first six months was 51.8 billion yuan.

The country also has a leading position in Europe in terms of yuan-denominated securities fund raising. In the first and the second quarters, 34 and 39 yuan-denominated bonds were issued in the Luxembourg Stock of Exchange, raising, respectively, 18.3 billion yuan and 24 billion yuan.

In the first half, the amount of yuan securities settlement in Luxembourg was almost 353 billion yuan. As of June 30, investors from Hong Kong, Macau and Singapore held more than 70 percent of all yuan securities issued in Luxembourg.

Apart from Luxembourg, London and Singapore have been among the forerunners in a race to build an offshore center for yuan business. Hong Kong is still the champion.

https://english.caixin.com/

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Shanghai FTZ Moves Closer to Launch

Experts weigh in on how policymakers in Shanghai can make the most of pilot without jeopardizing financial order By staff reporter Wang Xiaoqing

(Beijing) – The Shanghai government is busy working out the regulatory details for a free trade zone (FTZ), which is expected to be formally launched in late September.

One of its primary concerns is controlling the ramifications the FTZ's greater financial openness will have on other parts of the country and the stability of the whole financial market.

Much attention has been focused on what the government will introduce regarding interest rate liberalization and the capital account convertibility, as reform in these two areas will determine the extent to which the yuan can be regarded as a global currency.

"The government knows there is a tiger in the mountain and still wants to open a crack in the restrictions in the financial system," Xu Bin, a financial professor at China Europe International Business School, said in a reference to a proverb that a brave man will climb a mountain in which he knows there is a tiger awaiting him.

By tiger, Xu said he is referring to overseas speculative investors which have longed to enter the Chinese market but were largely held off by the country's capital controls.

Unlike the transportation of physical goods, the movement of financial resources is not restricted by boundaries drawn on the ground, he said when explaining the potential impact the FTZ may have beyond its geographic borders.

Financial regulations in the FTZ will be looser than in other parts of the country and investors will take advantage of those differences, he said.

"There will be no perfect mechanism to prevent cross-border arbitrage" in such an environment, he said. What the regulators can do is strike a balance between control and free flows of capital and "avoid, as much as possible, creating fuzzy areas in regulations."

Other scholars have proposed diversifying investment instruments to absorb the impact of capital inflows and better serve companies in the FTZ.

Financial futures based the yuan's exchange rate or the performance of the A-share market can be useful tools against risks associated with price fluctuations, said Ding Jianping, a research fellow at Shanghai Institute of International Finance Center (SIIFC), a government think tank.

Forward contracts and futures and exchange-traded funds, which are linked to A-shares and traded in offshore markets, have proven effective at discovering prices, stabilizing the market, and hedging and maintaining value, he said.

Meanwhile, foreign exchange derivatives available to domestic enterprises have fallen short of their demand to hedge risks associated with fluctuations in the yuan's value, he said.

With regard to financing, Zhao Xiaoju, another research fellow at the SIIFC, said the government may consider allowing companies in the FTZ greater freedom in selling bonds overseas. It is in the benefit of both investors and the issuing company to connect businesses in the FTZ closely with the bond market in Hong Kong and beyond, she said.

...(more)

https://english.caixin.com/2013-09-13/100582387.html

Urban RomanLamenting Laverne
Sep 18, 2013 - 10:30pm

Lamenting,

I have a Netdania chart percolating along in the other tab. The detailed chart, the Java applicaation, showing XAGUSD at the 1 hour resolution. 23.102, still holding onto the 23 handle.

Rui
Sep 18, 2013 - 10:29pm

GDX volume pinball

Observe how heavy volume bars rule GDX chart.
  • They show up either at the head or the tail of a move.
  • They could dictate boundaries on subsequent price movement.
  • They tend to get retested.
E1 on Apr15: 74M shares, Selling exhaustion. Sideway ensued for 2 months. E2 on Jun20: 67M shares. Selling exhaustion. L1 on Jun28: 75M shares. Excuse me! L1 launched rally. L1 challenged E2 on Jul1: E2 pinned L1 rally down. L1 retested. L1 challenged E1 on Jul23, E1 pinned renewed L1 rally down. E3 on Aug6: 39M shares. Exhaustion while challenging L1. L2 on Aug8: 65M shares. Excuse me! L2 launched another leg up. E4 on Aug15: 66M shares. Exhaustion while challenging E1. L3 on Aug27: 66M shares. Excuse me! L3 launched the down leg. E5 on Sep12: 64M shares. Exhaustion while challenging L2. L4 on Sep18: 110M shares. EEEEExcuse me!!! Backed by E2 & L2 it knocked price back up. Expect E4 & L3 to eat into the L4 rally and L4 to be retested some day later. You know the drill now.
DeaconBenjamin
Sep 18, 2013 - 10:23pm
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Sep 18, 2013 - 10:12pm

George Washington Horrified: The Fed's Catch-22

Fed recoils from 1937 tightening error as jobs evaporate

The American economy has shed 347,000 jobs over the past two months, roughly comparable with the rate of loss seen during the Great Recession. It is remarkable that the US Federal Reserve should even have been thinking of phasing out life-support in such circumstances.

It would be a grave error for the Fed to taper bond purchases at all at this juncture Photo: Reuters By Ambrose Evans-Pritchard

9:00PM BST 18 Sep 2013

The Fed's tough talk has already led to a 140 basis point rise in US 10-year Treasury yields, the benchmark price money for US mortgages and for the world (ex-China). It might as well have raised rates six times.

The shock decision on Wednesday night to put off tapering bond purchases is a recognition of what should have been obvious. Rising mortgage costs and the "tightening of financial conditions" could slow growth, it said. Indeed.

The net loss of jobs over the summer months has been entirely among men, mostly aged 25 to 54 and university educated. The cohort aged over 55 has been growing, so this is not happening because baby boomers are retiring early and happy to grow cantaloupes in Arkansas, or to play golf at Torrey Pines.

The labour "participation rate" dropped to 63.2pc in July, the lowest level since the late 1970s. The rate for men is at an all-time low. The unemployment rate has been falling, but chiefly because so many people are giving up hope and dropping off the rolls.

Some Fed governors seem to want to wash their hands of this, latching on to theories that the problem is "structural": due to evolving technology, or a "skills mismatch", or that catch-all concept "demographics". No doubt this is half true, but such claims were made in the early 1980s when jobs were scarce. The unemployed were decried as "shirkers" by the Chicago Tribune

in the 1930s.

US labour force participation rate (percentage)

Fortunately the hawks did not prevail. It is likely that vice-chair Janet Yellen played a key role, insisting that the jobless rate is nowhere near the "NAIRU" (non-accelerating inflation rate of unemployment) inflexion point, the level at which inflation starts to accelerate, the gauge she tracks as her lodestar.

Labour specialists say chronic lack of demand in the US is the real villain is this jobs slump. "The problem is not that the labour market is under performing; it is that the recovery has been very slow," says Stanford's Edward Lazear. A record 20.2pc of US households are now on food stamps. That is how they survive.

The economic growth rate over the past three quarters has been 0.1pc, 1.1pc and 2.5pc. This is below the Fed's own "stall speed" indicator - 2pc averaged over two quarters.

The economy has weathered the most draconian fiscal tightening (2.5pc of GDP this year) since the end of the Korean War remarkably well, helped by shale gas, but it is not yet at "escape velocity". The fiscal squeeze goes on.

The International Monetary Fund has advised Washington to go easy, citing an "output gap" of 4.6pc of GDP. The Dallas Fed's measure of core inflation was 1.2pc in July. Growth of the M1 money supply is the slowest in two years, while growth of broad M3 has slowed to the point where it could turn negative without QE. The alleged inflation threat is a fiction of febrile imaginations.

It would be a grave error for the Fed to taper bond purchases at all at this juncture, given the risks for Brazil, India, Turkey, South Africa, Indonesia, Ukraine and others already facing a turn in the credit cycle, and given the danger of another eurozone debt spasm, as happened at the end of QE1 and the end of QE2.

The Bernanke Fed has twice misjudged the global effects of premature tightening already, each time precipitating a credit and stock market crash within weeks, and each time forcing the Fed to capitulate. Third time lucky?

Weakening US money supply

One suspects that some hawks want to end QE for reasons that have nothing to do with jobs or inflation. A paper by former Fed governor Frederic Mishkin, "Crunch Time", warns that the Fed will struggle to extract itself from QE if it delays until 2014. It may drown from losses on its $3.6 trillion of bond holdings as yields rise.

Above all, their real motive seems to be fear that QE is stoking another asset bubble, and that the risk of this game now outweighs the rewards. This is a legitimate worry. As the Telegraph reported earlier this week, the Bank for International Settlement's former guru William White says the global debt structure is more dangerous than ever.

“This looks like to me like 2007 all over again, but even worse. All the previous imbalances are still there. Total public and private debt levels are 30pc higher as a share of GDP in the advanced economies than they were then, and we have added a whole new problem with bubbles in emerging markets,” he said.

Lest we forget, it was Mr White who saw the debacle of 2008-2009 coming with crystal clarity....(more)

https://www.telegraph.co.uk/finance/comment/ambroseevans_pritchard/10319186/Fed-recoils-from-1937-tightening-error-as-jobs-evaporate.html

Lamenting Laverne
Sep 18, 2013 - 10:08pm

Good evening Y'all

Does anyone have problems with viewing Netdania charts - possibly after an java update or similar. It just hangs, when loading data and asking me to please wait. It is driving me nuts.

Nice jump today ,-)

¤
Sep 18, 2013 - 9:57pm

太御览时序部 Why China Misses the Unipolar Moment

Why China Misses the Unipolar Moment

By Kerry Brown

September 17, 2013

EBG6NYSM4VCJ

Since its establishment in 1949, the People’s Republic of China has lived comfortably in the shadow of powers that thought and acted as though they were the most powerful and important entities on earth. For its first four decades of existence, these were the U.S. and the USSR. Since the end of the Cold War, it has been the U.S. alone that has occupied the unipole position.

During the era of two superpowers, China was able to skillfully play the U.S. against the USSR through an elegant game of triangulation, shifting its allegiance from one to the other while they were largely preoccupied with trying to undermine each other and finding ways for China to assist them. The collapse of the Soviet Union in 1991 was as much a shock to China’s balancing act as it was to the sustainability of Communism. Yet China was subsequently able to continue harmoniously and humbly living in the shadow of the U.S., while remaining careful not to replace the USSR as America’s number one opponent.

Beijing would have been more than happy to continue on this path until its economy and internal issues were all largely sorted out and it was able to join the league of stable, sustainable and developed countries. At that point, it would be able to stick up for itself, and be so important that no one would dare cross its path. It would have achieved this without conflict or unrest.

This path has become harder to follow in recent years. The U.S. has taken on enormous debt, such that Washington can no longer easily back up its forceful diplomacy with the deployment of the world’s most formidable fighting machine. Whatever one thought about the political and moral issues surrounding the Iraq and Afghanistan interventions, there is little doubt that they were immensely costly. Such losses made domestic conditions inside the likes of the U.S. and U.K. (the main interventionist countries) hostile to any future involvement in foreign conflicts that look like they could go on indefinitely.

Syria is one such conflict that looks, sounds and feels like it will resist any easy solutions. Nothing about what is happening in this brutal civil war looks good, and, for the U.S., the lack of any easy alternative, even if the current government goes, makes the risks of intervention there even higher.

However, the possible use of chemical weapons by the Assad regime has meant that the costs of outsiders doing nothing have grown steeper. China, Russia and other major international players have all signed agreements outlawing the use of chemical weapons. If they stand by now and allow this to happen the message to other dictators is unmistakable: if you are in a bind, then the world will sit by while you gas your own people. This is an outcome that even China, deeply wedded to non-intervention though it is, is reluctant to accept.

The recent impotence of the U.S. and its allies, therefore, is an oddly ambiguous moment for China. On the one hand, it means that everyone is going back to the diplomatic routes which China has been pushing all along. But they are doing so in a much more urgent context. Suddenly, the lack of ideas elsewhere has pushed Russia and China into a position where everyone is listening to what they propose to do about the current crisis. They cannot easily sit by such a visible and tragic conflict and say that everyone should do nothing. But they have turned their back on military options for the moment. Now, for the first time, and very genuinely, an anxious U.K., U.S. and others are waiting for answers from Beijing and Moscow.

In Beijing at least, there must be a few who look back with nostalgia to the days when an America heedless to the opinions of others could go ahead and act as it liked, and allow China to easily condemn and express disagreement with it. Now the onus is on China to come up with a solution and start to get a taste for what it feels like to be a global superpower.

https://thediplomat.com/china-power/why-china-misses-the-unipolar-moment/

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Key Economic Events Week of 8/10

8/10 10:00 ET Job openings
8/11 8:30 ET Producer Price Idx
8/12 8:30 ET Consumer Price Idx
8/13 8:30 ET Initial jobless claims
8/13 8:30 ET Import Price Idx
8/14 8:30 ET Retail Sales
8/14 8:30 ET Productivity & Unit Labor Costs
8/14 8:30 ET Cap Ute and Ind Prod
8/14 10:00 ET Business Inventories

Key Economic Events Week of 8/3

8/3 9:45 ET Markit Manu PMI July
8/3 10:00 ET ISM Manu PMI July
8/3 10:00 ET Construction Spending
8/4 10:00 ET Factory Orders
8/5 8:15 ET ADP employment July
8/5 9:45 ET Markit Service PMI
8/5 10:00 ET ISM Service PMI
8/6 8:30 ET Initial jobless claims
8/7 8:30 ET BLSBS for July
8/7 10:00 ET Wholesale Inventories

Key Economic Events Week of 7/27

7/27 8:30 ET Durable Goods
7/28 9:00 ET Case-Shiller home prices
7/29 8:30 ET Advance trade in goods
7/29 2:00 ET FOMC Fedlines
7/29 2:30 ET CGP presser
7/30 8:30 ET Q2 GDP first guess
7/31 8:30 ET Personal Income and Spending
7/31 8:30 ET Core inflation
7/31 9:45 ET Chicago PMI

Key Economic Events Week of 7/20

7/21 8:30 ET Chicago Fed
7/21 2:00 ET Senate vote on Judy Shelton
7/22 10:00 ET Existing home sales
7/23 8:30 ET Jobless claims
7/23 10:00 ET Leading Economic Indicators
7/24 9:45 ET Markit flash PMIs for July

Key Economic Events Week of 7/13

7/13 11:30 ET Goon Williams speech
7/13 1:00 ET Goon Kaplan speech
7/14 8:30 ET CPI for June
7/14 2:30 ET Goon Bullard speech
7/15 8:30 ET Empire State and Import Price Idx
7/15 9:15 ET Cap Ute and Ind Prod
7/16 8:30 ET Retail Sales and Philly Fed
7/16 11:00 ET Goon Williams again
7/17 8:30 ET Housing Starts and Permits

Key Economic Events Week of 7/6

7/6 9:45 ET Markit Service PMI
7/6 10:00 ET ISM Service PMI
7/7 10:00 ET Job openings
7/9 8:30 ET Initial jobless claims
7/9 10:00 ET Wholesale inventories
7/10 8:30 ET PPI for June

Key Economic Events Week of 6/29

6/30 9:00 ET Case-Shiller home prices
6/30 9:45 ET Chicago PMI
6/30 10:00 ET Consumer Confidence
6/30 12:30 ET CGP and SSHW to Capitol Hill
7/1 8:15 ET ADP Employment
7/1 9:45 ET Markit Manu PMI
7/1 10:00 ET ISM Manu PMI
7/1 2:00 ET June FOMC minutes
7/2 8:30 ET BLSBS
7/2 10:00 ET Factory Orders

Key Economic Events Week of 6/22

6/22 8:30 ET Chicago Fed
6/22 10:00 ET Existing home sales
6/23 9:45 ET Markit flash PMIs for June
6/23 10:00 ET New home sales
6/25 8:30 ET Q1 GDP final guess
6/25 8:30 ET Durable Goods
6/26 8:30 ET Pers Inc and Spending
6/26 8:30 ET Core inflation

Key Economic Events Week of 6/15

6/16 8:30 ET Retail Sales
6/16 8:30 ET Cap Ute and Ind Prod
6/16 10:00 ET Chief Goon Powell US Senate
6/16 4:00 pm ET Goon Chlamydia speech
6/17 8:30 ET Housing Starts
6/17 12:00 ET Chief Goon Powell US House
6/18 8:30 ET Initial Jobless Claims
6/18 8:30 ET Philly Fed
6/19 8:30 ET Current Account Deficit
6/19 1:00 pm ET CGP and Mester conference

Key Economic Events Week of 6/8

6/9 10:00 ET Job openings
6/9 10:00 ET Wholesale inventories
6/10 8:30 ET CPI for May
6/10 2:00 ET FOMC Fedlines
6/10 2:30 ET CGP presser
6/11 8:30 ET Initial jobless claims
6/11 8:30 ET PPI for May
6/12 8:30 ET Import price index
6/12 10:00 ET Consumer sentiment

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