My Dear Extended Family,
Apparently tapering is good for stocks (Dow plus $200) so there is an interpretation at the Fed that both the economy and inflation are moving higher. Others ask if the Fed is simply giving up.
Jim Sinclair’s Commentary
The latest from John Williams’ www.ShadowStats.com.
– November Housing Starts Surge Was Nonsense—a Reporting Aberration— As Indicated by Building Permits
– Stagnating/Declining Housing Activity Otherwise Remained Intact
Jim Sinclair’s Commentary
Yra Harris yesterday.
"As I have maintained about the GOLD market, be patient and watch to see how the market closes in the 24-hour period after any announced tapering. Many people seem to think that any action to curtail Fed bond purchases will lead to a dramatic selloff in gold as investors rush to book year-end losses to offset gains in the equity markets. I am not sure that will happen because many commodity-based traders have sliced their gold positions and besides, not everyone has a December 31 year-end. Give the market time to digest a great deal of news and be prepared with a game plan for whichever course of action you wish to trade."
Europe’s banking plans: Backstops and bail-ins
Published: Wednesday, 18 Dec 2013 | 3:34 AM ET
By: Catherine Boyle | Staff Writer and On-air Correspondent, CNBC
The euro zone’s plans to reshape its banking system and deal with future banking crises can seem like nothing more than an excuse to generate acronyms and create new bureaucracies.
Even European Central Bank (ECB) President Mario Draghi has warned that "decision-making may become overly complex" as a result of the new plans.
Another concern is that if the movement towards "bail-in" rather than "bail-out" – as signaled by the Cyprus banking crisis – continues, this could mark a sea change for investors in euro zone bonds.There are three key parts to the banking union: letting the European Central Bank (ECB) supervise euro zone banks; resolving future bank collapses and insuring ordinary people’s savings. While most seem agreed on the first, the second two have been more difficult to sort out.
The European Commission has suggested that euro zone banks all pay into a fund to bail out collapsed banks, which will eventually contain 50 billion euros after 10 years of payments. Olli Rehn, the EU commissioner in charge of economic affairs, described an agreement Tuesday night on this backstop, including another bank backstop during the decade where the rescue fund is being built up, as a "crucial breakthrough."
"This could be a competitive disadvantage because that money is going to have to come out of the real economy, and that’s not what Europe really needs," Christian Schulz, senior economist at Berenberg Bank, told CNBC.After a warning that negotiations might have to continue during Christmas week, the threat of working on December 23rd seemed to focus finance ministers’ minds.
Gold Gets Back To Bullish Ways With Lift From China
Stephen Leeb, Contributor
I remain confident on gold’s future prospects thanks largely to China, the world’s No. 1 gold buyer. In October China bought a near-record 130 tons. In the first ten months of 2013 China bought more than 950 tons, making a 1,150 ton tally likely this year, far above past gold-buying records for any country, including gold-crazy India.
Remember, that covers only readily trackable gold passing through Hong Kong. China almost certainly imports still more through other conduits.
In the same vein, most analysts overlook China’s huge gold mining activities. The latest U.S. Geological Survey data identifies China as the world’s largest gold producer, both in terms of its 400 tons of absolute annual volume extracted and its 20% annual take from in-ground reserves. Globally, the latter amounts, by far, to the largest portion of any natural resource reserves mined anywhere.
This tells me gold will head far higher long term, whether or not it bottoms out here or first falls another 10%. I eventually expect to see the mother of all gold bull markets, alongside resumptions in bull markets for most other commodities. Alas, these moves could also mark the effective death of the dollar.
Obama Panel Recommends New Limits on N.S.A. Spying
By DAVID E. SANGER and CHARLIE SAVAGE
Published: December 18, 2013
WASHINGTON — A panel of presidential advisers who reviewed the National Security Agency’s surveillance practices urged President Obama on Wednesday to end the government’s systematic collection of logs of all Americans’ phone calls, and to keep those in private hands, “for queries and data mining” only by court order.
In a more than 300-page report made public by the White House, the group of five intelligence and legal experts also strongly recommended that any operation to spy on foreign leaders would have to pass a rigorous test that weighs the potential economic or diplomatic costs if the operation becomes public.
The decision to monitor those communications, it said, should be made by the president and his advisers, not the intelligence agencies. It also recommends new limits on surveillance of ordinary non-Americans. It argues for applying to foreign targets of intelligence the protections accorded to Americans under the Privacy Act of 1974, meaning the government could release very little information about them.
The panel also declared that the N.S.A. should cease efforts to undermine work to create secure encryption standards to protect confidential communications and data stored on remote “cloud” servers, and make clear that “it will not in any way subvert, undermine, weaken or make vulnerable generally available commercial encryption.”
It also said the United States should get out of the business of secretly collecting flaws in common computer programs and using them for mounting cyberattacks, because the technique undermines confidence in American products. That technique, using what are called “zero day” flaws that have never been discovered before, were critical to the cyberattacks that the United States and Israel launched on Iran in an effort to slow its nuclear program.