Posts from Tuesday Apr 16 2013

The Closer


FT markets round-up: “Gold, equities and industrial metals attempted a fightback following the previous session’s sharp sell-off but met with varying degrees of success as lingering uncertainty about the outlook for global growth kept market bulls reined in. A rally for gold showed signs of fatigue during the US session, and the yellow metal was up just 1.5 per cent at $1,373 an ounce in late New York trade – having earlier nosed back above $1,400. In the prior two sessions, gold had suffered its sharpest drop in 30 years, catching many investors by surprise.” (Financial TimesRead more

Guest post: The case for digital legal tender

This is a guest post by Jean-François Groff, the CEO of Mobino, a Geneva-based mobile payments company. He is also one of the Web’s pioneers, having contributed to the definition of HTTP and HTML with Tim Berners-Lee at CERN.

Financial inclusion is undoubtedly a hot topic. As digital wireless infrastructure covers the globe, a host of mobile money providers have sprung into action to provide unbanked citizens with convenient ways to move money, turning phones into wallets. But the money in these digital wallets is not really equivalent to cash. The convenience of mobile money comes at a cost, both to the state and to its citizens. Read more

Raining on Reinhart and Rogoff

Mike Konczal has the post of the day summarising a new paper by economists Thomas Herndon, Michael Ash, and Robert Pollin — they find flaws in the methodology used by Reinhart and Rogoff, in their controversial paper on the relationship between high debt levels and economic growth.

The main takeaways, from Konczal: Read more

Should the Fed intervene in commodities? Ever?

When it comes to commodities everyone understandably likes to focus on supply and demand. However, there is another important driver for commodity prices that’s sometimes overlooked.

The real interest rate. Read more

Deposit guarantees and burden-sharing, quote du jour

Not the full-on collision of the two which initially popped up in Cyprus.

Still, we missed this slapdown by the ECB… directed at Spanish plans for the deposit guarantee fund there to buy out retail investors from illiquid preferred shares and subordinated debt in unlisted banks, when those banks are being restructured. Read more

EU carbon allowances as the new Bitcoin

Big news for the European Union Allowances market.

From the FT’s Pilita Clark and Joshua Chaffin:

The European Parliament has voted against propping up the EU’s emissions trading scheme in a move that sent prices plunging to new lows in the world’s biggest carbon market.

 Read more

Delta Air’s refining liability

Robert Campbell at Reuters is worried about refining margins. He thinks too many countries are becoming net exporters of refined oil products or intend to become exporters. That leaves few takers for surplus refined products in the world.

All of which leaves a lot of refining capacity vulnerable to closure in the next year or so. Read more

China’s Pettis moment

The reactions to Chinese macro data tend to go something like this…

Beat: Bulls are okay with this. Bears say it’s unsustainable, usually because of inflationary risks, policy tightening risks, credit risks, or the imbalances. FT AV commenters say the numbers are made up anyway.

Miss: Bears are okay with. Bulls say not to worry as it means more stimulus/loosening will happen. FT AV commenters say the numbers are made up anyway. Read more

Goldman’s big think about the commodity sell-off

Some deep thoughts from Goldman Sachs, by way of Jeffrey Currie and team, on the drivers of the current commodity sell-off (and no, their short gold advice from last week isn’t listed as one of them):

The sharp sell-off in gold was triggered by growing fears that the central bank of Cyprus would sell its gold reserves, potentially reflecting a larger monetization of gold reserves across other European central banks. The decline in prices was exacerbated by the breach of key technical price support level at $1,530/toz and then at the $1,434/toz 200-week moving average, creating the largest one day decline. Spillover from gold and renewed European and EM macroeconomic concerns also created sharp sell-offs in crude oil and base metals, that were mostly front-end driven, crushing spreads (the carry), as longer-dated prices remained remarkably stable.

 Read more

A weakness in the unstoppable AUD?

Australia’s currency has become a different kind of creature in the past few years, moving from being mostly a commodity play to more of a safe haven. This has been something of a double-edged sword for the country’s monetary policymakers: it helped avoid a big inflationary spike as the mining investment boom was booming; but now that wave is close to peaking, the burdens of having a premium currency are becoming harder to bear. Read more

Markets Live: Tuesday, 16th April, 2013

Live markets commentary from 

The (early) Lunch Wrap

Gold producers tumble || The S&P’s peak || Brent crude falls below $100 || Cargill calls for transparency in commodities || Energy Future Holdings’ creditors reject pre-packaged bankruptcy || Ergen trumps SoftBank with $25bn Sprint bid || Former Rochdale Securities trader pleads guilty to conspiracy and wire fraud || Greece on track to receive aid tranche || Gold’s fall sharpest since ’80s Read more

Don’t look down

What goes up, must come down, but most particularly the shiny yellow stuff lately. And Bitcoins. Can’t forget Bitcoins.

Anything else feeling a bit weighty lately?

 Read more

Further reading

Elsewhere on Tuesday,

– Gold can be an inflation hedge… over centuries.

– Are Germans really that poor? De Grauwe/Ji edition.

Never reason from a price change, commodities edition. Read more

The 6am Cut London

Asian stocks mostly lower, yen weakens slightly || 3 dead in Boston marathon bombing || Spot gold falls up to 1.9% || ENRC hit by whistleblower claim || Greek on track for aid tranche after Troika visit || Charterhouse may pull sales amid low interest || UK business confidence rises Read more

Some (more) crushing news for goldbugs

No respite for gold producers in the southern hemisphere on Tuesday morning…

And no dead cat bounce splat for the gold price.

And to spell out why this is such an issue for the gold miners, we present the following thoughts from Citigroup. Read more