Daily Digest 4/12 - Silver Smoke Screen, Kenya Must Get It Right With Oil, Happy Banking?
- We Are Not In An Economic Recovery; We Are In A Weak-Dollar-Fueled Market Rally
- Happy Banking?
- Is The Treasury's Imminent Launch Of Floaters The Signal To Get Out Of Dodge?
- Precious Metals Déjà Vu For Morgan Stanley?
- Silver Smoke Screen
- Kenya Must Get It Right With Oil
- Keystone XL Takes Center Stage in Maine(?)
- Energy: Refined Out Of Existence
- U.S. to Fund $35m in Bio-Oils Research Amid Food Price Concerns
And don’t think for a minute that the Foreign buyers/holders of Treasuries aren’t noticing what the Fed is doing. Foreign purchases of U.S. Treasury debt fell to 1.9% of GDP in 2011, from 6% of GDP in 2009. And it’s not just foreign purchasers of Treasuries that’s taking notice. Here in the U.S., private sector (banks, mutual funds, corporations and individuals) have reduced their purchases of U.S. Treasury debt to 0.9% of GDP in 2011, plunging from 6% of GDP in 2009.
These are very telling numbers. And they’re screaming that the strength in the U.S. dollar is a hoax…
Happy Banking? (TG)
If you believe the advertising, when you borrow money from a bank you are dealing with people who say they understand you and your business; someone who's prepared to work with you in good times and in bad. For many in business though the reality is rather different.
Back in early 2008, the Australian economy was going well. With the property market booming many businesses took out loans from Bankwest, a small but aggressive lender based in Perth.
Unfortunately, in the ultimate Catch 22, under central planning companies are disincentivized from investing cash into CapEx and organic growth, and instead are spending it on M&A and dividends, the two worst decisions management can take over the long run. It was one of the tangential "boxes" in the Singh paper titled "Floating Rate Note “puts”—are they forthcoming?" that caught our attention because it reminded us that in all the distraction over the past 3 months, we had forgotten that probably the most important event of 2012 is about to take place, and it has nothing to do with Europe, or with a central bank's balance sheet. Namely: the imminent arrival of Floating Rate Note Treasurys, or Floaters. In reality, while we noted this very curious development before, we did not think too much into what the Treasury may be signalling. Which was a mistake, because if Singh is correct, the US Treasury may be telegraphing to the world that it, or far more importantly, the TBAC, is quietly preparing for a surge in interest rates. Which as everyone and the kitchen sink knows, is THE black swan event (or gray for you taleb purists).
First of all, if Morgan Stanley did only pretend to purchase bullion on behalf of its clients, while charging them for the “bullion” and storage fees on that imaginary bullion, we have a word for such actions: fraud. So if Morgan Stanley was guilty of swindling its own clients in this manner then why wasn’t it required to acknowledge its guilt?
Silver Smoke Screen (June C.)
I first Discovered And Revealed that JPMorgan was the big concentrated short in COMEX silver in the fall of 2008 (having inherited the position from Bear Stearns). Since then, Ms. Masters has become somewhat of a lightening rod in the silver manipulation discussion world. Although I don’t believe I have ever mentioned her by name, she has been, more often than not, vilified in most Internet quarters. While I can empathize with the extreme sentiments that can arise from the outrage over the lingering silver crime in progress and the damage that it has caused to many, I don’t see much benefit in personal attack. Now, more than ever, we need to focus on the facts.
Kenya Must Get It Right With Oil (James S.)
Last week, however, the U.S. State Department issued a travel warning for Kenya, warning of "recently heightened" terrorism concerns and a "high rate" of violent crime in the country. Kenyan forces, meanwhile, are fighting alongside pro-government forces in Somalia, spurred on by a spat of kidnappings of Westerners in the region last year. The ICC, for its part, announced charges against four Kenyans for crimes related to post-election violence in 2007. More than 1,000 people were killed in the election violence and the State Department notes more elections are set for early 2013. This week, the White House said it was extending the national emergency regarding Somalia for another year because of the security situation there.
Keystone XL Takes Center Stage in Maine(?) (James S.)
Earlier this year, Portland Pipeline Corp. decided it was abandoning plans to reverse the flow of an 18-inch pipeline so it would carry oil from Montreal to South Portland, Maine. A week before the Maine Senate took up the Keystone Xl measure, which holds no legal water, Larry Wilson, president of Portland's counterpart Montreal Pipeline Ltd., was saying the reversal was no longer viable "due to economic and market conditions." That means Maine lawmakers spent an hour in formal session wrangling over of Keystone XL rather than debating a similar pipeline planned through their own state.
Energy: Refined Out Of Existence (Ronald S.)
Sunoco petrol stations are a fixture of the US eastern seaboard, their blue-and-yellow awnings touting the brand’s status as official fuel of Nascar racing. But after July, none of the petrol they sell will actually be made by Sunoco.
According to the Iowa university research center, the most straightforward way to “de-link” biofuels from the food chain is to “capture biomass that is currently treated as either waste or that is a co-product of existing production processes with very low or negative current economic value.” Potential waste streams for biofuels production include “a portion of municipal trash and garbage, crop residues, wood pulp residues, and forest residues.”
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