Daily Digest

Daily Digest 4/18 - Yuan Nearly "Freely Usable," Years Of The Modern, China Orders Banks To Raise Reserves

Monday, April 18, 2011, 10:47 AM
  • BRICS Credit: Local Currencies To Replace Dollar
  • A Soft Patch Or Something Worse?
  • China's Yuan Nearly "Freely Usable": Central Bank's Yi
  • Years Of The Modern
  • Inviting Anarchy, But Does Anyone Care?
  • China Orders Banks to Raise Reserves to Combat Inflation
  • Riding Along With The Cops In Murdertown, USA
  • Philadelphia Orchestra's board votes to file for bankruptcy
  • S&P Cuts U.S. Ratings Outlook To Negative

Crash Course DVDOwn the Crash Course Special Edition Set with Presenter’s Pack (NTSC or PAL)

Economy

BRICS Credit: Local Currencies To Replace Dollar (Jason C.)

The agreement, the first-of-its-kind, was signed at the 3rd BRICS summit here attended by Indian Prime Minister Manmohan Singh, China's Hu Jintao, Brazil's Dilma Rousseff, Russia's Dmitry Medvedev and South Africa's Jacob Zuma.

A Soft Patch Or Something Worse? (ES)

The U.S. economy appears to be running dangerously close to stall speed, and the rest of the world may not have enough oomph to compensate.

China's Yuan Nearly "Freely Usable": Central Bank's Yi (ES)

China's yuan is close to being a freely usable currency, one of two key tests for it to be included in the International Monetary Fund's currency basket, the deputy governor of China's central bank said on Sunday.

Years Of The Modern (JimQ)

I find myself vainly trying to pierce the veil of events yet to be. The future is filled with haunting phantoms of unborn deeds which could lead to renewed glory, untold death and destruction, or the possibly the end of the great American experiment. Walt Whitman captured the change of mood in the country with his poem. History books are filled with dates and descriptions of events, battles, speeches and assassinations. What most people don’t understand is Fourth Turnings aren’t about events, but about the citizens’ reaction to the events.

    Crash Course DVDOwn the Crash Course Special Edition Set with Presenter’s Pack (NTSC or PAL)

Inviting Anarchy, But Does Anyone Care? (Ilene)

I have been writing about the nightmare known as auction-rate securities since mid-January 2009. I often pause to reflect on ARS holders whom I have ‘met’ here atSense on Cents but whom I will never truly know. I think of how their lives have been forever changed and negatively impacted from having been entangled in this ARS web. The pain shared in so many stories is very real.

China Orders Banks to Raise Reserves to Combat Inflation (jdargis)

In China’s latest move to fight inflation, the government said Sunday that Chinese banks would be required to set aside larger cash reserves.

China’s central bank said that effective Monday, large banks here would have to set aside 20.5 percent of their cash, an increase of half a percentage point. The move essentially reduces the amount of cash available for loans.

    Crash Course DVDOwn the Crash Course Special Edition Set with Presenter’s Pack (NTSC or PAL)

Riding Along With The Cops In Murdertown, USA (jdargis)

After the door is unlocked and I enter police headquarters, it is easy to see why. There are only six patrolmen on duty for a Saturday night. So broke is Flint that the city laid off two-thirds of its police force in the last three years. The front desk looks like a dusty museum piece.

Philadelphia Orchestra's board votes to file for bankruptcy (June C.)

The board of the 111-year-old Philadelphia Orchestra voted Saturday in favor of a Chapter 11 reorganization. The claim was expected to be filed this weekend in U.S. Bankruptcy Court, Eastern District of Pennsylvania, and the orchestra was expected to list assets at several times liabilities - an equation unusual for businesses seeking bankruptcy protection, according to several experts.

The move makes Philadelphia's the first major U.S. orchestra to file for bankruptcy, say industry groups and veteran observers.

S&P Cuts U.S. Ratings Outlook To Negative (Saxplayer00o1)

Standard & Poor's cut its ratings outlook on the U.S. to negative from stable while keeping its Triple-A rating on the world's largest economy. "More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," said Standard & Poor's credit analyst Nikola G. Swann.

Article suggestions for the Daily Digest can be sent to [email protected]. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

14 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4169
idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
What Downgrade? Pros Shrug

What Downgrade? Pros Shrug Off Warning From S&P http://www.cnbc.com/id/42646310

 Investor reaction to the Standard & Poor's warning about burgeoning US fiscal problems was swift if unpredictable: Bonds and currencies, which otherwise might have fallen, gained, while stocks, which could have benefited, lost.

 

cnbc.com

The S&P cut to the US outlook, after all, should have reflected itself in the nation's credit quality.

 That in turn would have hit debt prices and shaken faith in the currency. At the same time, equities should have gone on their merry way on the belief that the money flowing out of fixed income would have found a home in stocks.

 Seeing that none of the logical events actually occurred led to the belief in some quarters that the reaction from capital markets to the S&P move was a lot less than met the eye.

 "The whole thing makes no sense to me," said Aaron Gurwitz, chief investment officer at Barclays Wealth in New York. "I can't tell a consistent story that explains all of these facts. My working hypothesis is this whole things is ephemeral—people were looking for a reason to sell stocks today."

 



Jeff Cox
Staff Writer
CNBC.com

 

From an investment perspective, Gurwitz said the only real takeaway is perhaps a less constructive view on the US dollar, which continues to be in jeopardy of losing its status as the world's reserve currency. Even in that case, the dollar gained Monday as measured against a basket of foreign currencies.

Gurwitz, like others, expects the stock plunge to be a short-term event that will lose steam quickly.

"We're encouraging our clients everywhere and in the US in particular to ask, 'What percentage of my assets are denominated in dollars?'" he said. "If it's about 85 percent, then people may want to think about diversifying a little bit more."

But elsewhere, it was almost as if the steep sell off in the stock market was happening on some other plane.

Theories regarding the day's pullback ran beyond the S&P move, and many strategists advised against using the news as a selling point. Dave Lutz, managing director of trading at Stifel Nicolaus in Baltimore, surmised that it was far more about a rally in the yen than a threat of US debt default.

Otrhes, 

in fact, said pay no attention to the pullback, or at worst use it as reason to build up some more stocks.

"The more likely outcome is this is a buying opportunity," said James Paulsen, chief investment strategist at Wells Capital Management in Minneapolis. "We're down almost 2 percent today because of some agency's stated opinion on something. There's a lot of opinions every day. It's not like there's a fundamental change from where we were last Friday."

In fact, several economists said the S&P warning could serve as an effective cattle prod to get Washington's warring parties to the bargaining table.

"S&P's actions could help advance the process toward a long-run strategy," David Resler, chief economist at Nomura Securities in New York, wrote in a note to clients. "By entering the debate in this way and at this time, S&P has served a useful public service by putting all parties on notice that words and actions in the political debate have consequences."

John Higgins, senior market economist at Capital Economics in London, combined the theme of a buying opportunity with the notion of good timing by S&P—even as Paul Ashworth, his Toronto colleague and chief US economist at the firm, said it was "hard to argue" with the downgrade.

"Investors might come to see S&P’s decision in a positive light if it prompts Congress to focus on delivering a credible deficit reduction plan," Higgins wrote in a research note. "After all, the rating agency’s decision to put the UK’s AAA-rating on negative outlook in May 2009 fueled a debate on the need for massive fiscal tightening, and the tough decisions taken by the new coalition government were eventually rewarded by S&P with the UK’s outlook being revised back up to stable in October last year."

Indeed, those looking for positive straws to grasp at considering the S&P's bleak assessment of US finances turned their gaze around the world and found few rivals for the dollar and the US as an investment destination.

"In this world today, the United States, from the size of capital markets and its political system, even though we're all frustrated, screams out stability," said Bob Andres, CIO at Merion Wealth Partners, in Berwyn, Pa. "That's reality vis-a-vis the rest of the world. With the amount of money out there there's not a lot of capital markets that do what the United States does, so where are these guys going to go?"

Still, disregarding the S&P warnings comes with risk, particularly if all of the buoyant voices are wrong and Washington pays no heed to S&P's shot across the bow.

The Federal Reserve can't keep printing money forever to pay the US debt, and the market faces its sternest test yet in two months when the central bank pulls its Treasury-buying program that has injected so much liquidity into the investing stream.

If any reason, then, is to be taken from Monday's market action, it's that for once the equity side, rather than the bond crowd, may become the new vigilantes. That's usually the job for fixed income, but short-dated Treasurys recouped losses that came immediately after the S&P news broke.

"It's just a warning, and there's still enough credibility in the government that the drop in price and rise in yields was attractive to some investors considering what's going on in Europe," said Kim Rupert, managing director of global fixed income analyst at Action Economics in San Francisco. "There's going to be a day where that's not going to happen unless we start to get our house in order."

crash_watcher's picture
crash_watcher
Status: Silver Member (Offline)
Joined: Aug 12 2008
Posts: 146
Gold Futures Climb to Record After S&P Revises U.S. Outlook

Gold Futures Climb to Record After S&P Revises U.S. Outlook to Negative

“The perception that a downgrade would even be possible for the U.S. is driving the gold market,” said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. “The dollar is going to get whacked.”

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
Posts: 4169
National debt passes $14.3 trillion

 

Treasury Direct link

 

 

Date Debt Held by the Public Intragovernmental Holdings Total Public Debt Outstanding
04/08/2011 9,652,196,858,759.48 4,613,186,275,260.05 14,265,383,134,019.53
04/11/2011 9,652,587,224,970.63 4,615,173,314,221.26 14,267,760,539,191.89
04/12/2011 9,652,592,140,320.38 4,620,401,463,297.06 14,272,993,603,617.44
04/13/2011 9,652,808,590,790.24 4,611,338,768,256.04 14,264,147,359,046.28
04/14/2011 9,657,636,099,303.31 4,613,156,019,881.58 14,270,792,119,184.89
04/15/2011 9,679,202,714,701.01 4,626,133,866,291.10 14,305,336,580,992.11
idoctor's picture
idoctor
Status: Diamond Member (Offline)
Joined: Oct 4 2008
Posts: 1731
Ran Paul

Ran Paul

affert's picture
affert
Status: Silver Member (Offline)
Joined: Sep 22 2008
Posts: 100
The speculation can end!

Here is the definitive guide to the next 95 years.

http://xkcd.com/887/

Everything you'll need to know!

es2's picture
es2
Status: Bronze Member (Offline)
Joined: Dec 31 2010
Posts: 68
Pierre Lassonde - Texas University Buys $1 Billion of Gold Bars

4/16/11: Pierre Lassonde - Texas University Buys $1 Billion of Gold Bars

With gold closing at new all-time highs and silver closing at new multi-decade highs, today King World News received word from legendary Pierre Lassonde, former CEO of Newmont Mining, that Texas University now holds $1 billion worth of gold bars.  Lassonde stated, “This is another turning point in the gold market.  It’s the first large institutional holding of gold and they are quite public about it.”

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/4/16_Pierre_Lassonde_-_Texas_University_Buys_$1_Billion_of_Gold_Bars.html

es2's picture
es2
Status: Bronze Member (Offline)
Joined: Dec 31 2010
Posts: 68
Saudi slashes oil output, says market oversupplied

Saudi slashes oil output, says market oversupplied

Saudi Arabia's oil minister said on Sunday the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices.

http://www.reuters.com/article/2011/04/17/us-saudi-oil-idUSTRE73G14020110417

es2's picture
es2
Status: Bronze Member (Offline)
Joined: Dec 31 2010
Posts: 68
Poet's picture
Poet
Status: Diamond Member (Offline)
Joined: Jan 21 2009
Posts: 1891
Slashing Output? Or Can't Even Keep Production Level?
es2 wrote:

Saudi slashes oil output, says market oversupplied

Saudi Arabia's oil minister said on Sunday the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices.

http://www.reuters.com/article/2011/04/17/us-saudi-oil-idUSTRE73G14020110417

Hmm.... Slash oil output by 800,000 barrels per day due to oversupply despite Libya's decrease? Or can't even keep production level - and trying to conserve what's left?

Poet

AinSophAur's picture
AinSophAur
Status: Member (Offline)
Joined: Sep 25 2009
Posts: 18
Ken C's picture
Ken C
Status: Platinum Member (Offline)
Joined: Feb 13 2009
Posts: 753
More Spin oil output
Poet wrote:
es2 wrote:

Saudi slashes oil output, says market oversupplied

Saudi Arabia's oil minister said on Sunday the kingdom had slashed output by 800,000 barrels per day in March due to oversupply, sending the strongest signal yet that OPEC will not act to quell soaring prices.

http://www.reuters.com/article/2011/04/17/us-saudi-oil-idUSTRE73G14020110417

Hmm.... Slash oil output by 800,000 barrels per day due to oversupply despite Libya's decrease? Or can't even keep production level - and trying to conserve what's left?

Poet

Yeah, my thoughts exactly. More spin to delay discussing peak oil.

gregroberts's picture
gregroberts
Status: Diamond Member (Offline)
Joined: Oct 6 2008
Posts: 1024
OPERATION SLEEPING GIANT

Throughout our history, all of our enemies have misjudged the strength and resolve of the American people.  The British Officer Corps were convinced that Americans were cowards who would not dare to fire on the Kings troops, only to have their asses handed to them by a swarm of ticked off American veterans while retreating back to Boston from Lexington and Concord.  Nazi Germany and Imperial Japan also misjudged our resolve, confusing our love of prosperity and peace with weakness, only to awaken a sleeping giant that kicked them in the teeth.  Our enemies have always misjudged us as being too soft, too decadent, too disorganized and weak to put up much of a fight.  And we have proved them wrong every time.  The same holds true now, in the fight against the globalist, power-mad “elites’ who think they have us pegged, think they have it all figured out, and think we are too weak to resist their plans.  It’s time to give them a lesson in American ingenuity and resolve.

 

Stewart Rhodes,

http://oathkeepers.org/oath/2011/04/17/oath-keepers-operation-sleeping-giant-awakening-veterans-to-get-off-the-u-s-s-economic-titanic-and-back-onboard-the-u-s-s-constitution/

Bobbertsandy's picture
Bobbertsandy
Status: Member (Offline)
Joined: Jan 13 2011
Posts: 9
Frightening- but all too predictable

It is a compliment to Chris when I say that none of this surprises any one of us that has watched the Crash Course.

Soft Patch or something worse?

'At the start of 2011, growth looked solid. The U.S. unemployment rate was finally dropping, consumers were in a spending mood, and economists were busily upgrading first-quarter growth projections to the range of 4 percent.

Those forecasts are falling fast. Many economists now think the U.S. economy grew at a sluggish 1.5 percent to 2 percent pace over the first three months of the year, and one forecaster even raised the possibility of a negative reading."

We have been in negative growth for a long time and Fuzzy Numbers showed us why.  Are these people really this stupid as to not question to accounting methods in a meaningful way?  John Williams should be a national news speaker all over the place right now.

The story about Flint is the most frightening though.  This is a glimpse into a post dollar collapse for America's big cities.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Login or Register to post comments