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Monthly Archives: March 2013

Samurai Abe Gets Kuroda Confirmed, More Easing to Come

“Japanese Prime Minister Shinzo Abe’s initiative to end two decades of economic stagnation took its biggest step yet as Parliament confirmed his picks for a new Bank of Japan (8301)leadership team.

Haruhiko Kuroda, who advocated an inflation target more than a decade before the central bank set one, won a majority of votes in the upper house a day after his nomination as governor was endorsed by the lower body. Abe’s picks for two deputies were also approved, with BOJ critic Kikuo Iwata prevailing after being opposed as too radical by some lawmakers.

Kuroda, the outgoing Asian Development Bank chief, has repeatedly said monetary policy alone can end the deflation that has afflicted the world’s third-largest economy for 15 years. His next task is corralling the nine-member board behind fresh stimulus, with options ranging from accelerating bond-purchase plans to setting a target for expanding the monetary base.

“The next focal point is whether Kuroda will hold an emergency meeting,” before the scheduled April 3-4 board gathering, said Shuichi Obata, senior economist at Nomura Securities Co. inTokyo. “The BOJ is likely to extend the maturity of assets it buys and expand bond purchases.”

Japan’s stocks climbed after the confirmation votes, with theNikkei 225 Stock Average (NKY) closing up 1.5 percent, double the gain in the MSCI Asia Pacific Index. The Nikkei closed at its highest since before the Lehman Brothers Holdings Inc. bankruptcy in 2008….”

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Samsung Unveils the Galaxy S 4



From a design point of view, the Galaxy S 4 iterated from the Galaxy S III, while still offering a more streamlined, refined design. The screen is now 5 inches but the body of the device doesn’t feel much larger than the Galaxy S III. Moreover, Samsung made the device slimmer and stronger. Gone is the plasticky feel of the Galaxy S III; the Galaxy S 4 is light, but feels higher quality.


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The Global Endgame

“Is pushing consequence forward the same as eliminating consequence? We will find out at some point in the near future.

Today’s project is to overlay The Global Endgame in Fourteen Points (February 15, 2013) on the classic cycle of credit/speculative expansion and credit destruction/speculative bust. My monthly video program host Gordon T. Long helpfully provided this chart of the modern credit cycle, which examines the Cycle of Deflation through the lens of financialization:

The key point being made in The Global Endgame is that the entire global economy is in the final stages of the “winter” cycle of credit destruction and collapse of phantom collateral. Let’s start with the 14 points:

1. “Boost Phase” of Credit Expansion
2. Overextended Credit Expansion and Over Capacity
3. Financialization and Collateral
4. Era of Financialization
5. Growing Malinvestment
6. Phantom Collateral from Asset Bubbles
7. Bubble Implosions
8. Impaired Debt and Policy Decisions
9. Stalled Consumption
10. Cheap Money Offered
11. Shrinking Loans and Bank Speculation
12. Search for Yield from Shrinking Pool of Productive Assets
13. Increasingly Speculative Investments with high Risk
14. Stagnation: Over-indebted, overcapacity with limited growth

The key dynamics here are debt saturation and diminishing returns: piling on more debt (i.e. borrowing more money) to stimulate spending only leads to fantastic excesses of speculation and mal-investment: $70,000 biopsies, $200 million fighter aircraft, $200,000 bachelor’s degrees, McMansions in the middle of nowhere, and so on.

The actual yield on all that borrowed money keep falling: ever-larger sums are borrowed and spent, but there are fewer jobs created and ever-diminishing returns of value created.

Even though central banks are holding interest rates near zero to enable governments to borrow vast sums, substituting debt expansion for actual value creation eventually leads to debt-serfdom as interest payments start crowding out all other spending.

All too soon governments and households alike are borrowing more just to pay the interest on the mountain of existing debt. This is the inevitable result of incentivizing credit expansion and speculation.

The central banks are attempting to nullify the cycle of credit expansion and destruction by buying much of the sovereign debt being issued by profligate, hopelessly insolvent governments. Left to the open market, interest rates would rise as the risk of massive debt expansion becomes undeniable.

Eventually, higher rates would pinch off borrowing or trigger default.

The central banks are playing an unprecedented game: suppressing interest rates by expanding their balance sheets, i.e. creating money, and buying vast quantities of government bonds.

This has given government leaders a free hand to keep borrowing more to avoid any politically painful limits on substituting debt for tax revenues. The expansion of central bank balance sheets is apparently painless and apparently consequence-free. So what if the Fed expands its balance sheet from $3 trillion to $30 trillion as it enables the debt-junkies to keep borrowing without limits?

Is pushing consequence forward the same as eliminating consequence? We will find out at some point in the near future: perhaps 2015, perhaps 2021.

Gordon T. Long and CHS discuss The Global Endgame (25 minutes, 30 slides)

Max Keiser and CHS discuss debtism, sickcare cartels and much more:
Keiser Report: Bitcoin Millionaires vs Paper Billionaires; CHS and Debtism

Things are falling apart–that is obvious. But why are they falling apart? The reasons are complex and global. Our economy and society have structural problems that cannot be solved by adding debt to debt. We are becoming poorer, not just from financial over-reach, but from fundamental forces that are not easy to identify or understand. We will cover the five core reasons why things are falling apart…”

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IEA Lowers Forecasts for Oil Demand

“In the wake of yesterday’s OPEC oil market report, we have the latest monthly report from the International Energy Agency (IEA) today. While the two differ somewhat in specifics, the general story is the same. Global demand for crude will not grow as quickly as either OPEC or the IEA had originally forecast, and prices will be lower.

The IEA today lowered its forecast global demand growth to 820,000 barrels a day, or a total of 90.6 million barrels a day. Yesterday OPEC forecast demand growth of 800,000 barrels a day for a total of 89.7 million barrels a day.

According to the IEA, OPEC production rose by 150,000 barrels a day in February to 30.49 million barrels a day, due mainly to an increase in Iraqi production. Demand for OPEC crude fell by 100,000 barrels a day, due largely to refinery maintenance in the United States and Europe.

Non-OPEC production fell by 60,000 barrels a day in February to 54.1 million barrels a day, which is still 600,000 barrels a day higher than average 2012 production. The IEA forecasts non-OPEC supply to grow by 1.1 million barrels a day in 2013 to a total of 54.5 million barrels a day.

Whether demand will catch up with supply in 2013 is the big question. Given the weakness in the global economy, betting that crude demand will grow and prices will rise is no better than an even-money proposition….”


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$GOOG To Pay $7m For WiFi Eavesdropping

“Google will pay $7 million to settle complaints from dozens of U.S. states about its unauthorized collection of personal data transmitted over Wi-Fi networks.

The money will be paid to 37 states and the District of Columbia, which had gone after Google after it admitted that its Street View cars had collected the data inadvertently between 2008 and 2010.

As well as photographing their surroundings, the Street View cars collect data about the location of Wi-Fi access points to help with Google’s navigation services. It was during that process that the company’s cars collected personal information sent over those networks.

As part of the settlement, Google said it would destroy the personal data it collected.

It has also removed the equipment and software used to collect the data from its Street View vehicles and will not collect additional information without prior notice and consent, the Attorney General of New York said in a statement.,,,”

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Gapping Up and Down This Morning



Symb Last Change Chg %
BFAM.N 30.56 +1.57 +5.42
NTI.N 32.70 +1.37 +4.37
SBGL.N 6.10 +0.21 +3.57
PBF.N 39.06 +1.17 +3.09
RIOM.N 4.59 +0.12 +2.68


Symb Last Change Chg %
WAC.N 45.11 -1.89 -4.02
NGVC.N 20.21 -0.67 -3.21
INFY.N 52.76 -1.59 -2.93
LOCK.N 11.58 -0.33 -2.77
LND.N 5.09 -0.13 -2.49



Symb Last Change Chg %
CRDS.OQ 2.10 +0.51 +32.08
EMITF.OQ 2.75 +0.48 +21.15
OCZ.OQ 2.10 +0.36 +20.69
CLIR.OQ 6.90 +1.11 +19.17
MGYR.OQ 5.95 +0.95 +19.00


Symb Last Change Chg %
CALI.OQ 4.42 -0.79 -15.16
SHOS.OQ 37.50 -5.50 -12.79
LAKE.OQ 4.29 -0.62 -12.63
XNPT.OQ 7.72 -0.87 -10.07
DMND.OQ 15.89 -1.71 -9.72



Symb Last Change Chg %
SVLC.A 2.54 +0.12 +4.96
AKG.A 3.48 +0.14 +4.19
FU.A 3.37 +0.13 +4.01
SAND.A 9.96 +0.35 +3.64
CTF.A 20.79 +0.27 +1.32


Symb Last Change Chg %
REED.A 4.41 -0.23 -4.96
EOX.A 6.95 -0.16 -2.25
ORC.A 14.40 -0.15 -1.03
ALTV.A 10.78 -0.02 -0.19

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Will Unsound Money Lead to Statism?



“As a young man, I voraciously read George Orwell’s “1984”, Aldous Huxley’s “Brave New World” and Alvin Toffler’s trilogy which included “Future Shock”, “The Third Wave” and “Power Shift”. During the era of the Vietnam War, I wondered seriously about the future and how it was destined to unfold. Now being considerably older, I have the vantage point to reflect back on my early ruminations and expectations. Unfortunately, I am too old to alter the lessons that are now so painfully obvious. Instead, I pass the gauntlet to those who can understand and take action on what I have unavoidably come to expect for America.

Huxley Transition To Orwell

The ‘Huxley-Orwell’ Transition..”

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MBA: U.S. Mortgage Applications Off 4.3% Last Week

“The total number of mortgage applications filed in the U.S. last week slipped 4.3% as interest rates increased, the Mortgage Bankers Association said Wednesday.

The refinance index fell 5.2% for the week ended March 8 from the previous week, according to MBA’s weekly survey, which covers more than three-quarters of all U.S. residential-mortgage applications. On a seasonally adjusted basis, the purchasing index was down 2.5% from the prior week, MBA said.

Low interest rates have attracted new buyers and persuaded many homeowners to refinance their existing mortgages. However, tightened credit restrictions still bar many borrowers from filing loan applications….”

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MetalMiner: Gold Bull Market Not Over

“Is the decade-long bull market in gold finally over? Probably not, according to observers who say short-term traders are keeping a false lid on prices and that rising production prices will lift the metal higher once more.

MetalMiner reported major exchange-traded fund (ETF) providers offer a line of defense in the ultimate direction of gold. They hold tons of gold around the world.

Nevertheless, analysts at banks such as Goldman Sachs, Credit Suisse and Societe Generale have recently trimmed their price forecasts and claimed the gold bull market may be dead.

“The major ETF providers are understandably not having any of this argument, saying it’s the action of a limited part of the ETF investment community made up of hedge funds and short-term players” MetalMiner stated. “Long-term players will keep the faith the Exodus will soon abate.”

Bruce Cook, an exploration analyst, estimated recently the average price to mine gold has risen from $300 to about $1,500 per ounce since 2000.

“New viable mines are few and far between, yet mining costs are relentlessly rising. This alone will provide a floor to prices in the medium term,” MetalMiner predicted.

Some big hedge fund managers, like George Soros and Steve Mandel, have recently become more pessimistic about gold’s prospects. But rival hedge fund manager John Paulson has been staying the course as a gold bull, according to The Wall Street Journal.,,,”

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$AAPL Jumps to Number 2 in Revenues in India

“Apple has indeed managed a significant turnaround in India’s smartphone market, according to new figures out from IDC today (via CNN). The Apple smartphone grabbed 15.6 percent of India’s smartphone market by revenue  in Q4 2012, according to new data from the research firm, just behind market leading Samsung with its 38.8 percent, a significant change from the third quarter of last year, when IDC showed that Samsung had 46 percent share and Apple didn’t even crack the top five.

The about-face from Apple comes after IDC said in early February that the Mac maker had turned on the juice with respect to sales in India, growing its share by as much as 400 percent. At the time, no specific details about Apple’s actual change in percentage were released, but today’s update indicates that growth has been impressive in absolute terms, as well as relative when it comes to revenue. Still, the company has a lot of ground to make up when it comes to actual device shipment share…”

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The Dems Will Introduce $1 Trillion in New Taxes, No Balanced Budget Proposal

“…..The Democrats will introduce their first formal “budget” in 4 years at a press conference at 10:30.

Erik Wasson at The Hill reports on what will be in it:

The first budget from Senate Democrats in four years includes nearly $1 trillion in new taxes but would not balance the budget….”

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$MS Declares the U.S. Has Reached an Inflection Point, Crisis Now Over

“One of the big themes of 2013 is the end of the US economic crisis.

That’s not to say that the economy is incredibly strong (GDP growth remains mediocre and unemployment is too high) but several of the key conditions that characterized the financial crisis, and the ensuing years, are starting to fade.

The household deleveraging process, for example, is almost done. That’s coinciding with a beginning of real interest rate normalization. In financial markets, we’re seeing an end to the risk-on-risk-off situation, and more dispersion among stocks.

One of the first firms to jump on board this idea was Goldman, which made its big call that things would start to normalize in 2013, particularly the back half (and now Goldman thinks it’s possible that it’s happening already).

Others have jumped on board too.

In a new note, Morgan Stanley‘s Vincent Reinhart talks about the coming inflection point for the US economy, and he also talks about the change coming in the second half of the year.

In the Morgan Stanley forecast for the US, the trajectory of economic activity marks an inflection point midway through 2013. The severe financial crisis of 2008-09 necessitated significant downward adjustments by the private sector to the levels of aggregate demand and efficient supply. As the event recedes further into history, however, the drag on growth from these ongoing level adjustments plays out.

In our forecast, the expansion of real GDP steps up to around 2-3/4 percent in the second half of this year and beyond….”

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Despite the Highest Level of Supplies Since 1990, WTI Trades Higher

You can thank the clam for allowing cheap money to flow and speculate in the commodities space. Perhaps when the fed is easy we should reinstate the rule that no speculation can take place in the breadstuff of the country unless it is a direct hedge for those in the business.

WTI is up $0.26 @ $92.80

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The FCC Approves T-Mobile Metro PCS Merger

Deutsche Telekom AG (DTE)’s proposal to combine its T-Mobile USA unit with smallerMetroPCS Communications Inc. (PCS) won approval from U.S. competition and telecommunications authorities.

Allowing the fourth- and fifth-largest U.S. wireless carriers to combine will benefit American consumers as the mobile market continues to strengthen, Federal Communications Commission Chairman Julius Genachowski said in an e-mailed statement yesterday. Benefits include more high-speed wireless service, the agency said in an order.

The combination is unlikely to harm consumers, and may help T-Mobile become a stronger competitor, the Justice Department said in an e-mailed news release announcing it had closed its investigation into the deal.

“The FCC’s approval marks another significant milestone in bringing our two companies together,” John Legere, president of T-Mobile, said in an e-mailed statement. “We look forward to completing the transaction.”

The proposed combination needs approval of shareholders who are to meet on April 12, according to the statement. It urged shareholders to throw out white proxy cards distributed by “a dissident stockholder” and vote for the deal. Failure to vote has the same effect as voting against the combination, according to the statement.

Company Debt…”

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Au Flip Flops As Investors Gauge Recovery Over Global Debasement

“Gold swung between gains and losses below the highest level this month in London as investors weighed improving economic data against speculation for more stimulus.

Gold rose yesterday after European Central Bank council member and head of Germany’s Bundesbank Jens Weidmann said the ECB will maintain its accommodative monetary-policy stance “for as long as necessary.” Global equities are 0.5 percent below yesterday’s highest level since 2008 before a report today that may show U.S. retail sales gained last month. Investors have cut gold exchange-traded product holdings to a six-month low.

Gold “edged up amid dip-buying and expectations of additional central bank measures,” Mumbai-based Kotak Commodity Services Ltd. said today in a report. “However, firmness in equity markets and ETP redemptions will continue to weigh on the gold price.”

Gold for immediate delivery was little changed at $1,592.55 an ounce by 9:46 a.m. in London. Prices rose as much as 0.1 percent and fell as much as 0.2 percent after reaching $1,598.80 yesterday, the highest since Feb. 28. Futures for April delivery were little changed at $1,591.20 on the Comex in New York. They gained the past four days, the best run since August.

Futures trading volume was 37 percent below the average in the past 100 days for this time of day.

Bullion is down 4.9 percent this year on optimism global economies are strengthening. Holdings in gold ETPs fell the past four weeks and slipped 7 metric tons yesterday to 2,472.9 tons, the lowest since September, data compiled by Bloomberg show. They’re down 159.6 tons from the December record.

Exchange Reserves…”

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