Jim Sinclair’s Commentary
The latest from John Williams.
- Unexpected Production Decline Was on Top of Downside Revisions
- Annual Growth Dropped to Six-Month Low
- Implied Fourth-Quarter Production Pace Slowed Sharply
- Continued Contractions in, and Downside Revisions to, Auto Production Should Hammer Inventory and Third- and Fourth-Quarter-GDP Estimates
"No. 674: October Industrial Production"
Industrial Production Drops; Auto Manufacturing Slumps 3rd Month In A Row – Worst Run In 5 Years
Tyler Durden on 11/17/2014 09:27 -0500
Driven by a combination of Mining (-0.9% – biggest drop in a year), Utilities (-0.7% led by a 3.2% plunge in Natural Gas) and most of all motor vehicle manufacturing (-1.2%), US Industrial Production slid 0.1% in October (notably missing expectations of a 0.2% rise). This is the 3rd monthly drop in motor vehicle & parts production – the worst consecutive run since Jan 2009. It seems the government-free-credit inspired subprime auto boom that provided just enough impetus to a fragilee conomy to enable the Fed narrative of "things are better" to play out… has ended… abruptly.
Industrial Production drops, missing notably.
Worst auto production run since Jan 09
3 Billion Gallons Of Fracking Wastewater Pumped Into Clean California Aquifiers: "Errors Were Made" State Admits
Submitted by Tyler Durden on 11/17/2014 – 13:07
Dear California readers: if you drank tapwater this morning (or at any point in the past few weeks/months), you may be in luck as you no longer need to buy oil to lubricate your engine: just use your blood, and think of the cost-savings. That’s the good news. Also, the bad news, because as the California’s Department of Conservation’s Chief Deputy Director, Jason Marshall, told NBC Bay Area,California state officials allowed oil and gas companies to pump up to 3 billion gallons (call it 70 million barrels) of oil fracking-contaminated waste water into formerly clean aquifiers, aquifiers which at least on paper are supposed to be off-limits to that kind of activity, and are protected by the government’s EPA – an agency which, it appears, was richly compensated by the same oil and gas companies to look elsewhere. And the scariest words of admission one can ever hear from a government apparatchik: "In multiple different places of the permitting process an error could have been made."
ECB could buy gold to revive economy
Declining economic data may "theoretically" leave the door open for the European Central Bank to buy assets including gold and shares
By Peter Spence, Economics Correspondent
10:00AM GMT 17 Nov 2014
Gold, shares, and exchange-traded funds (ETFs) – the European Central Bank (ECB) may turn to buying any or all of these in an attempt to boost inflation in the currency bloc.
Yves Mersch, a member of the ECB’s executive board, said that the purchase of these assets was “theoretically” an option for the central bank, which earlier this year resolved to “take further unconventional measures to counteract a lengthy period of lower inflation”.
His speech, delivered in German, came as official statistics published on Friday showed inflation of just 0.4pc in the year to October.
Very low levels of inflation were characterised by Mr Mersch as “abnormally low”, as price growth remained well below the ECB’s target of close to 2pc.
The official said that while there was scope to buy such assets, the ECB is about to embark on a programme of asset-backed securities purchases.
“Every purchase of a security – or precious metal or foreign currency – naturally increases the credit risk of the buyer”, he added, noting that the ECB may lack a mandate to increase the risk of its balance sheet.
Eric Sprott: Global Gold Demand Is Overwhelming Supply
Submitted by Tyler Durden on 11/16/2014 21:23 -0500
Submitted by Adam Taggart via Peak Prosperity,
Precious metals have had an especially tough go of it over the past month. Both gold and silver are back in price territory last seen in 2010.
Eric Sprott returns to the program to discuss the facts as we know them in this market, and what’s likely to happen from here. Specifically, he explains the tremendous imbalance currently seen between global supply and demand for precious metals. In his view, prices will have to correct upwards — prodigiously — to bring the two back in alignment:
We see almost 60 tons a week being delivered on the Shanghai Gold Exchange. Well, you start annualizing 60 tons a week you’re talking 3,000 tons a year now. We saw 94 tons of gold go into India in September. We saw the Russian Central Bank buy 37 tons of gold in September. I mean I could come up with numbers that might suggest that we’ve got 400 tons a week of demand. And we only got 230 tons a week of mine supply. And I’ve only gotten to three data points. I haven’t even gone to the rest of the world.
We’ve now created a situation unfortunately in the market where between high frequency trading and algorithms and interference by the planers they can make things happen that looks like everything is OK. And it’s the "OK" part where I think we can really relate to gold not being allowed to go up. Because that’s the canary in the coal mine. If gold was above $2,000 we’d all be wondering: What the hell is going on here? And so they haven’t allowed it to happen.
But by suppressing the price — and one of the great things about a price of $1,100/oz is that you can buy a lot of gold at $1,100 versus $1,900 — you can buy almost 50%-60% more gold than you could three years ago with the same amount of money. And you can buy 3x the silver. With the same amount of money!
Jim Sinclair’s Commentary
Another name of QE is Debt Monetization so expect DM to replace QE.
Industrial Output in U.S. Unexpectedly Fell in October
By Victoria Stilwell Nov 17, 2014 12:23 PM ET
Factory production struggled to gain traction in October as automakers cut back for a third consecutive month, showing U.S. manufacturing was off to a slow start in the fourth quarter.
The 0.2 percent increase in output matched September’s advance after it was revised down, figures from the Federal Reserve in Washington showed today. Total industrial production unexpectedly dropped 0.1 percent, reflecting the vehicle pullback and less demand at utilities, mining companies.
A broadening in consumer spending beyond motor vehicles, where a recent dip left sales near the strongest levels in eight years, will be needed to give manufacturing an additional boost as growth slows overseas. American plants pumped out more machinery and electronics last month, a sign business investment is bolstering the economic expansion.
The outlook “remains quite favorable,” said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York, who correctly forecast total output would drop. “If we do have consumers beginning to spend again and businesses starting to invest in a more meaningful manner, we should see that reflected in the industrial sector.”
U.S. stocks fluctuated, after the Standard & Poor’s 500 Index climbed to a record last week, as corporate deals helped offset the industrial production data and a report showing Japan fell into a recession last quarter. The S&P 500 fell less than 0.1 percent to 2,038.09 at 12:20 p.m.