Jim Sinclair’s Commentary
John Williams shares the following with us.
- With Some Double-Counting, Sharp Declines in Headline Inflation Boosted Monthly Real Retail Sales and Earnings
- An Issue with Consistent Measurement of Gasoline Prices?
- August Annual Inflation: 1.7% (CPI-U), 1.6% (CPI-W), 9.4% (ShadowStats)
- Outlook Weakened for 2015 Social Security COLA
"No. 659: August CPI, Real Retail Sales and Earnings"
Just Three Days?
Author : Bill Holter
Published: September 18th, 2014
So many topics to choose from today, Russia is pushing back on sanctions and has already begun to cut gas supplies to Europe. The Scottish independence vote which if "yes" means the end to a 1,000 year empire and brings into question the Anglo American banking and financial systems themselves. The ISIS situation and whether (in reality "how") we go back there with boots on the ground or not. We also have the FOMC meeting and statement coming today where we will find out whether QE will be publicly discontinued or not …I say "publicly" because the reality is such that QE will remain forever whether admittedly or in the shadows and hidden from view. We also have news of India tripling their gold demand as new physical gold exchanges open in China tomorrow. The "live" date has been pushed forward by a week or more, I can only wonder what this means because the Chinese NEVER do anything by chance or without reason.
I could have chosen any of these topics but I had a conversation with a very long time friend and client this morning and he brought up the question that seems to be burning in everyone’s mind, "when?". When does everything come apart at the seams? Please don’t get this wrong, he was not asking me "when?" I thought, rather, he was commenting on how many people are expecting some sort of "slow burn". He said "so many people think this will be 3 years, 5 years or even 12 years" to unravel.
Here is the point, the "fuse", or I should say "fuses" are lit from so many different directions I don’t have enough fingers and toes to count them all. Only one fuse (cause) needs to reach the powder keg but the way it looks to me is we will more than likely see many reach the powder at the same time. When I say same time I believe all within the same week as many are interconnected and many will be advanced by the ignition of others.
When my buddy said "3 years" I immediately said to him "you mean 3 days right?". He said to me "that’s exactly what I’m talking about, once this thing goes how can it last more than 3 days?". Let me explain this, once we "ignite" I don’t see how the markets can function for any more than 3 days (two weeks at the absolute maximum) before being closed. Today, everything relies on everything else for "value" or "foundation". It’s like a building block tower where pulling even one block will take the whole thing down…and this happens quickly, NOT in some slow motion, slow burn or controlled collapse. This would be nice but unfortunately not the case.
China opens gold market to foreigners, seeks more pricing power
SHANGHAI, Sept. 18 (Xinhua) — Foreigners now have access to China’s gold market after the Shanghai Gold Exchange (SGE) launched its international board on Thursday.
The yuan-denominated board was opened in the China (Shanghai) Pilot Free Trade Zone (FTZ), a move to encourage foreign participation in China’s tightly controlled gold market.
The launch will mark the first time China has allowed foreign investors to participate in the country’s gold trade.
Despite being the world’s largest producer and consumer of the precious metal, China has little say over the pricing of gold in the global market. Authorities hope to gain greater influence over pricing by granting global investors access to the country’s 3.2 trillion yuan (522.8 billion U.S. dollars) gold trading market.
The new international board hopes to challenge current gold market leaders London and New York. So far, it has attracted dozens of foreign members, including renowned international commercial and investment banks but it did not release their names.
Gold contracts listed on the SGEI will include a 99.5 percent 12.5 kg contract widely traded among central banks and bullion investors on the global market, a 99.99 percent 1 kg contract traded in China’s domestic gold market and 100 gram contract of the same purity. Daily price volatility will be capped at 30 percent on either side of the closing price from the previous day.
Jim Sinclair’s Commentary
This assures a Bric based SWIFT system totally competitive with Brussels.
European Parliament Calls For Excluding Russia From SWIFT System
Updated 03:50 p.m. Moscow time
MOSCOW, September 18 (RIA Novosti) – In a resolution adopted Thursday, the European Parliament called on the EU member states to consider excluding Russia from the Society for Worldwide Interbank Financial Telecommunication (SWIFT) financial transaction system.
The European Parliament “calls for the EU to consider excluding Russia from… the Swift system,” the resolution reads.
The European Parliament does not develop projects and is not responsible for making decisions concerning sanctions. All the bills on restrictive measures are elaborated by the European Commission, the final decision rests with the individual EU countries.
The calls by the European Parliament come just a week after the United States and the European Union implemented new sanctions against Russia targeting the country’s banking, energy and defense sectors. Moscow has repeatedly stated that Russia is not a party to Ukraine’s internal conflict, and said that Western sanctions run counter to the principles of international law.
This spring, Russian authorities started searching for ways to decrease Russian financial markets" dependence on SWIFT, when a number of banks were hit by Western sanctions.
Jim Sinclair’s Commentary
Now this is really nuts.
US schools received M16 rifles and grenade launchers under Pentagon programme
At least 26 school districts participated in surplus gear, which has come under increased scrutiny following Ferguson riots
10:34AM BST 18 Sep 2014
School police departments across the country have taken advantage of free military surplus gear, stocking up on mine resistant armored vehicles, grenade launchers and scores of M16 rifles.
At least 26 school districts have participated in the Pentagon’s surplus programme, which is not new but has come under increased scrutiny after police responded to protesters in Ferguson, Missouri, last month with tear gas, armored military trucks and riot gear.
Now several school districts say they’ll give some of the equipment back, while others plan to keep the rifles they received. Nearly two dozen education and civil liberties groups sent a letter earlier this week to the Pentagon and the Justice and Education departments urging a stop to transfers of military weapons to school police.
The Los Angeles Unified School District – the nation’s second largest school district covering 710 square miles and with more than 900,000 students – said it would remove three grenade launchers it had acquired because they "are not essential life-saving items within the scope, duties and mission" of the district’s police force.
But the district plans to keep the 60 M16s and a military vehicle – known as an MRAP – used in Iraq and Afghanistan that was built to withstand mine blasts.
Jim Sinclair’s Commentary
The interesting part of the headline is "Among Price Ambition."
China Opens Gold Market to Foreigners Amid Price Ambition
By Bloomberg News Sep 18, 2014 10:05 AM ET
China will give foreign investors direct access to its gold market for the first time today as the biggest-consuming nation seeks to exert more influence over prices while boosting the yuan’s global use.
The Shanghai Gold Exchange will start trading contracts in the city’s free-trade zone that will be linked to its domestic spot market and available to about 40 international members including Goldman Sachs Group Inc. and UBS AG. Access was previously limited to some Chinese units. Gold in China this year cost as much as $31 an ounce more and $42 less than the London spot price, according to data compiled by Bloomberg.
China, which overtook India as the biggest bullion buyer in 2013, wants to establish a benchmark price in Asia by opening up trading to a larger pool of investors. It’s also pushing to reduce controls over the movement of capital across its borders after policy makers pledged last year to carry out the widest expansion of economic freedoms since the 1990s.
“It’s indicative of the ambition to move the gold market more to where the consumption is,” Victor Thianpiriya, commodity strategist at Australia & New Zealand Banking Group Ltd., said by phone from Singapore. “It makes sense that price discovery occurs in the center of consumption.”
Premier Li Keqiang toured the free-trade zone today, days before its one-year anniversary. The FTZ started as a testing ground for liberalizing interest rates and boosting the yuan’s role in global transactions.
Australian PM says police raids follow IS linked beheading plot
BY MATT SIEGEL
SYDNEY Thu Sep 18, 2014 10:25am EDT
(Reuters) – Militants connected with radical group Islamic State were planning to behead a member of the public in Australia, Prime Minister Tony Abbott said on Thursday, after hundreds of police raided homes in a sweeping counter-terrorism operation.
Abbott said there was a "serious risk from a terrorist attack" days after Australia raised its national terror threat level to "high" for the first time, citing the likelihood of attacks by Australians radicalized in Iraq or Syria.
Australia is concerned over the number of its citizens believed to be fighting overseas with militant groups, including a suicide bomber who killed three people in Baghdad in July and two men shown in images on social media holding the severed heads of Syrian soldiers.
More than 800 police were involved in the pre-dawn security operation in Sydney and Brisbane, which was described as the largest in Australian history and resulted in the detention of 15 people, police said.
Abbott told a news conference that members of the radical group had planned to conduct a public beheading.
Jim Sinclair’s Commentary
It is far from all roses out there.
Housing Starts in U.S. Dropped More Than Forecast in August
By Jeanna Smialek Sep 18, 2014 8:47 AM ET
Housing starts slumped in August after reaching the highest level in almost seven years, pointing to an uneven pickup in the U.S. residential real-estate market that will limit its contribution to economic growth.
Beginning home construction fell 14.4 percent, the most since April 2013, to a 956,000 annualized rate following July’s revised 1.12 million pace that was the strongest since November 2007, the Commerce Department said today inWashington. Last month’s reading was lower than the most pessimistic forecast of any economist surveyed by Bloomberg. Building permits also fell.
Slow wage growth and tight lending standards continue to challenge the homebuilding industry by placing homeownership out of reach for some Americans. Even so, job market progress and low interest rates could pump life into residential real-estate as the economic expansion gains momentum.
“This data seems a little bit weaker, but overall, the trend is still modestly higher,” said Gennadiy Goldberg, U.S. strategist at TD Securities USA LLC in New York, who had the lowest estimate for starts among economists surveyed. “The data remains choppy, but overall the trend remains higher.”
Fewer Americans than forecast filed applications for unemployment benefits last week, a sign the labor market continues to strengthen, another report showed today.
Why is Obama sending military to attack the Ebola virus?
Updated by Julia Belluz on September 17, 2014, 3:50 p.m.
Tuesday’s announcement by President Barack Obama — that the US would be sending in an army of 3,000 to fight Ebola — came as a relief to the many wondering when the international community would wake up to the daily horror show playing out in West Africa.But the tactics also raised some questions: why was Obama sending soldiers to fight off a virus? And why has he been characterizing this disease spread as a "security threat" and "security priority"?
Why Obama is describing Ebola as a "security threat"
Obama has repeatedly referred to the threat of Ebola in security terms, arguing the virus could cripple the already fragile economies in the African region. He’s made the case that this will have consequences for not only the security of countries there, but also for nations around the world — even if the virus doesn’t spread beyond Africa.
For examples of this war-like mentality, look no further than the president’s address, delivered Tuesday from the Centers for Disease Control headquarters in Atlanta:
"If the outbreak is not stopped now, we could be looking at hundreds of thousands of people infected, with profound political and economic and security implications for all of us. So this is an epidemic that is not just a threat to regional security — it’s a potential threat to global security if these countries break down, if their economies break down, if people panic. That has profound effects on all of us, even if we are not directly contracting the disease."
US destroys ISIS training camp in first such strike
US aircraft have targeted a training camp for Islamic State (IS, formerly ISIS/ISIL) jihadists in northern Iraq, military officers said on Thursday. It was the first such air strike. American forces destroyed “an ISIL armed vehicle, two ISIL-occupied buildings and a large ISIL ground unit,” AFP cited a US military officer, who spoke on condition of anonymity. A second air raid targeted an IS ammunition depot southeast of Baghdad, Central Command said. US warplanes have conducted a total 176 air strikes against the Islamic State, mostly in northern Iraq, since August 8.
Putin ‘privately threatened to invade Poland, Romania and the Baltic states’
German newspaper Suddeutsche Zeitung reports that Ukrainian President Petro Poroshenko told European Commission that Putin made the threat in a recent conversation
By Justin Huggler, Berlin
6:48PM BST 18 Sep 2014
President Vladimir Putin privately threatened to invade Poland, Romania and the Baltic states, according to a record of a conversation with his Ukrainian counterpart.
"If I wanted, in two days I could have Russian troops not only in Kiev, but also in Riga, Vilnius, Tallinn, Warsaw and Bucharest," Mr Putin allegedly told President Petro Poroshenko of Ukraine, reported Süddeustche Zeitung, a German newspaper.
If true, this would be the first time that Mr Putin has threatened to invade Nato or EU members. Any threat to send Russian troops into the capitals of Latvia, Lithuania, Estonia, Poland and Romania would cause grave alarm among Western leaders.
If Mr Putin were to act on this, Britain could find itself at war with Russia. All five countries mentioned in this alleged conversation are members of both the EU and Nato. They are covered by the security guarantee in Article V of Nato’s founding treaty, which states that "an attack on one is an attack on all". In a speech in Tallinn earlier this month, President Barack Obama confirmed Nato’s commitment to this doctrine.
Mr Putin’s alleged threat bears similarities to remarks he made to Jose Manuel Barroso, the president of the European Commission, in which he warned: "If I want to, I can take Kiev in two weeks".