Thought For This Morning:
If a G20 meeting is a total bomb, all you have to do is blast over the airwaves that it was a great success. Joseph Goebbels would be proud.
Today’s gold market is about whether or not Bernanke will continue with QE.
Europe is opting for austerity by recognizing that no present politician will be re-elected. They wish Bernanke to do the same. There is no economic epiphany there.
Jim Sinclair’s Commentary
Here is a report from Seeking Alpha, the FT blog, on the G20 meeting that comes somewhat closer to the truth of what happened, which is nothing much.
It has holes such as how does the reduction of the IMF vote within the G20 make the IMF anything but closer to redundancy.
The barrage of MOPE today has never been witnessed ever before in my more than 50 years of market experience.
G-20 Presses On With Plan to Cool Currency Battles
BY BOB DAVIS IN WASHINGTON AND EVAN RAMSTAD IN GYEONGJU, SOUTH KOREA
The Group of 20 nations are pursuing an accord to end battles over currencies that relies on goodwill and peer pressure rather than enforceable sanctions.
Under a deal hammered out this weekend at a meeting in Gyeongju, South Korea, finance ministers from big industrialized and developing economies agreed to try to maintain trade balances—which are both a reflection of and a determinant of exchange rates—at "sustainable levels." Unable to agree on a precise metric, as the U.S. proposed, the ministers agreed only to measure compliance by "indicative guidelines," still to be negotiated.
Jim Sinclair’s Commentary
Here is another article closer to the truth about nothing happening at the G20 in favor of Western economies.
The G20 Communique – A Victory for Asia
Some thoughts on Saturday’s G-20 communique release:
Geithner’s suggestion regarding current Account Caps is something that no sovereign nation would ever agree to, at least not today. Asian nations want to allow their currencies to strengthen; however they are all wary about doing it on their own. The agreement/accord that is coming out is good in that Asian nations are agreeing to move together, and we think this is the key. Current Account targets as a percentage of GDP, while the primary reasoning behind the ‘Plaza’ Accord, are difficult to measure given the data suffers from a lag from country to country. No sovereign nation wants to set a target that will be debated and threatened by the U.S. Congress on a monthly or quarterly basis.
China has made it very clear that it will allow its currency to strengthen. However China is also wary of strengthening the yuan too far, too fast. It has seen what happened to Japan following the ‘Plaza’ Accord, and knows the ramifications of a one-off revaluation. Other Asian nations want to follow China’s lead. They also want to have an understanding on direction. This weekend’s accord gives all G-20 countries an understanding of the direction, and surety in the timing. The biggest fear in the market over the past few weeks has been a one-off revaluation, and the Asian reaction is a sensible one: Why should they shoulder the pain for the U.S. – a country that has consistently called for a strong dollar, and now realizes that has cost the export sector significantly. Asia relies on its exports to the U.S. and to China.
China and its neighbors see the need to strengthen their currencies to cool growth and to especially cool inflation. The knowledge that they are in this together and all have similar needs is a wonderful outcome from this meeting. Going forward they will all move together and allow their currencies to strengthen, over time resulting in a more balanced global economy. While it would be better for the U.S. if it was done overnight, for Asia it is better to be done at their own pace and over time. This saves them face, their economies and finally brings Asia together as a block – something that has been lacking up until today.
The agreement may look like a loss for global unity, but it actually bands Asia together for the first time. Now we have an Asia block, an European block, and the U.S. The U.S. will look to 2015 for an agreement on the Current Account issue. We believe that by 2015 the issue will be moot. Indeed, given that China strengthened the yuan by over 20% between June 2005 and June 2008, and we project that flexibility going forward, by 2015 the U.S. may be the Surplus country and Asia may be the deficit block.
Jim Sinclair’s Commentary
Mistakes, like ignorance of the law?
Bank of America finds foreclosure mistakes: report
BANK OF AMERICA (BAC) for the first time acknowledged finding some mistakes in foreclosure files as it begins a review of 102,000 cases, reported The Wall Street Journal.
Jim Sinclair’s Commentary
Our gold delivery man, JB Slear asks "What happened to all the laws protecting everyone from this?"
The simple answer JB is that Wall Street owns Washington. Laws of the land do not apply to those SOBs.
Dubious signatures, missing, inaccurate paperwork halt 4,450 city foreclosures
BY Robert Gearty
Sunday, October 24th 2010, 4:00 AM
Thousands of foreclosures across the city are in question because paperwork used to justify the seizure of homes is riddled with flaws, a Daily News probe has found.
Banks have suspended some 4,450 foreclosures in all five boroughs because of paperwork problems like missing and inaccurate documents, dubious signatures and banks trying to foreclose on mortgages they don’t even own.
The city’s not alone. All 50 states are investigating foreclosure paperwork, evicted homeowners are hiring lawyers and buyers of foreclosed homes are fretting over the legality of their purchases.
Last week, New York’s top judge, Jonathan Lippman, began requiring all bank lawyers to sign a form vouching for the accuracy of their foreclosure paperwork.
That could have been a problem for one Long Island foreclosure that was being brought by GMAC Mortgage last year.
Jim Sinclair’s Commentary
Becoming toxic waste? It is toxic waste.
Dollar at Risk of Becoming ‘Toxic Waste’: Charts
Published: Monday, 25 Oct 2010 | 8:12 AM ET
The dollar’s slump could get far worse if the dollar index takes out last year’s low, Robin Griffiths, technical strategist at Cazenove Capital, told CNBC Monday.
"If the (dollar index) takes out the low that was made roughly a year ago I really think that will not only encourage more sales, it will cause a little bit of minor panic," Griffiths said. "A year ago it was deemed too cheap, if it goes any lower than that it’s actually become toxic waste."
The dollar [.DXY 76.875 -0.595 (-0.77%) ] resumed its recent downtrend Monday in the wake of a meeting of finance ministers from the Group of 20 nations at the weekend. The meeting failed to yield a definitive agreement on currencies, putting selling pressure on the greenback.
"The dollar is being trashed, we’ve actually had effectively devaluation of about 14 percent in the last two months," Griffiths said.
Jim Sinclair’s Commentary
The blitz today of MOPE is beyond anything I have ever seen. The IMF is becoming yesterday’s news, losing its clout except for poor nations.
This is simply wrong. Somebody is scared to death of something.
Analysis: IMF power shift opens way for more breakthroughs
By Lesley Wroughton
WASHINGTON | Sun Oct 24, 2010 7:12pm EDT
WASHINGTON (Reuters) – A G20 agreement to give emerging market countries more power in the International Monetary Fund opens the door for breakthroughs on easing global tensions over trade imbalances.
The surprise deal reached at weekend meetings of finance ministers from the Group of 20 in South Korea shifts IMF voting power to under-represented emerging countries like China, India, Brazil and Turkey.
Countries like the United States are betting that with greater representation emerging economies such as China will be more willing to address the trade distortions causing currency volatility and threatening increased protectionism.
The deal avoided a widening of the gulf between emerging and developed nations and a chaotic ending to a G20 meeting in which the United States failed to convince China and others to agree to targets to limit current account imbalances.
The IMF agreement also spares the G20 from losing credibility, opening the way for G20 heads of state, meeting in Seoul on November 11 and 12, to handle more politically difficult decisions on fixing the trade imbalance problem.
Jim Sinclair’s Commentary
Your nose grows, your nose grow. They did not agree by leaving all key items voluntary or not agreed upon.
This is MOPE at a spiritual level.
G-20 powers agree to Geithner currency and trade plan
By Howard Schneider
Saturday, October 23, 2010; 5:34 PM
Finance ministers from the world’s major nations agreed to a U.S.-brokered plan for easing tensions over exchange rates and world trade patterns, saying that a "fragile and uneven" economic recovery was at risk if top powers pursued conflicting policies or used the value of their currencies to gain an edge for their exports.
Aiming to head off what some have dubbed a developing "currency war," the statement from the finance leaders of the Group of 20 nations was a carefully worded bargain across a range of issues. It put China on the record as seeking to bring down its massive trade surplus and let its exchange rate fluctuate more. It also hinted that any move by the U.S. Federal Reserve to further ease monetary policy would be measured so as not to disrupt currency values or capital flows in emerging market nations.
Although the core ideas are not new ones for the G-20 – previous statements from the group have promised similar commitments to flexible exchange rates, for example – the accord crafted over two days of talks in South Korea represents a tangible step. The group agreed as it has before that "excessive imbalances" in trade and other relationships should even out over time – requiring countries such as China and Germany to rely less on exports for their economic growth – and the members pledged for the first time to submit to an agreed-upon procedure for measuring progress.
The methods of measurement are still to be developed, but the language marks a potential turning point as the G-20 struggles to ensure its agreement over broad principles translates into action. U.S. officials say they intend to push for more detail, including possible timeframes and numerical targets, as the work of the finance leaders is submitted for approval by the G-20 heads of state who gather in South Korea next month.
The plan envisions a greater role for the International Monetary Fund in overseeing whether exchange rates and trade balances are moving as intended. While the IMF has no power over any nation’s individual policies, the expectation is that the combination of agreed-upon goals and peer pressure could influence how nations behave. Changes to the IMF’s structure, including greater representation for emerging market nations, were also approved by the finance ministers in hopes of increasing the fund’s authority.
Jim Sinclair’s Commentary
This is what currency induced cost push inflation looks like in its infancy.
McDonald’s Intends to Raise Prices
BY PAUL ZIOBRO
McDonald’s Corp. plans to raise menu prices to blunt higher costs, including what would be its first such increase in the U.S. in more than a year—a time when the burger chain’s sales have thrived amid lower prices.
The company expects to increase prices in the U.S. and Europe amid projections that commodity costs will rise between 2% and 3% in 2011, Chief Financial Officer Peter Bensen said Thursday during a conference call after McDonald’s reported a 10% increase in third-quarter earnings and added that October sales appear strong.
Jim Sinclair’s Commentary
This is no shock to those that have not cheaped out, having paid John at Shadowstats.com his meager fee.
60 Minutes Shock Report: National Unemployed and Underemployed 17.5%; California 22%
by Larry O’Connor
In a report sure to cause consternation at the White House and in the offices of the Democratic Leadership in Congress, “60 Minutes” provided an in-depth report on the realities of the unemployment situation in America today.
When you take into account the underemployed as well as the unemployed, the national rate hits 17% and California a staggering 22%.
To put a face on the realities of the underemployed in America under Obamanomincs, reporter Scott Pelley spoke with a fiber-optics engineering manager who has been looking for work for over a year. He just took a job working at a Target. 20% of the unemployed in America have college degrees.
According to the report, 1/3 of the unemployed have been out of work for over a year. This hasn’t happenned since the Great Depression.
Airing one week before the mid-term elections, this report explains better than anything, exactly what is at stake for our country on November 2.
Jim Sinclair’s Commentary
CIGA Paul-Henri correctly says “Just change the shields to US Marshals and the name of the bank to any of the International Investment Companies.
Jim Sinclair’s Commentary
Currency induced cost push inflation is here and operative.
It is hiding, not too well, in plain view.
TIPS Yield Goes Negative for First Time
BY MARK GONGLOFF AND DEBORAH LYNN BLUMBERG
In its bid to fight deflation, the Federal Reserve seems to be gaining some traction.
On Monday, investors snapped up government securities designed to protect against inflation, generating so much demand that the Treasury was able to sell them with a negative yield, the first time that has happened.
The strong demand for the Treasury Inflation-Protected Securities, known as TIPS, at Monday’s auction is at least partly a sign of investors’ conviction that the Fed is likely to succeed in its efforts to kickstart the economy enough to avoid deflation.
