U.S. Is Seeking Billions From Global Banks in Currency Manipulation Settlement

 A combo of Chinese currency RMB or Yuan, US Dollar, Hong Kong Dollar and other currencies notes is seen outside a foreign exchange shop in Hong Kong on March 12, 2015.

Photographer: Jason Li/EyePress/Sipa via AP Images

(Bloomberg) -- The U.S. Justice Department is seeking about $1 billion each from global banks being investigated for manipulation of currency markets, according to two people familiar with the talks.
The figure is a starting point in settlement discussions, with some banks being asked for more and some less than $1 billion. One bank that has cooperated from the beginning is expected to pay far less, one of the people said. Penalties of about $4 billion are on the table, according to one of the people, though the number could change markedly.
Banks are pushing back harder than in some previous negotiations, including those for mortgage-backed securities, and the final penalties could be lower, people close to the talks said.

The discussions, which have begun in earnest in recent weeks, could lead to settlements that would resolve U.S. accusations of criminal activity in the currency markets against Barclays Plc, Citigroup Inc., JPMorgan Chase & Co., Royal Bank of Scotland Group Plc and UBS Group AG. The government has also said it is preparing cases against individuals.
Peter Carr, a Justice Department spokesman, declined to comment, as did spokesmen for the banks.
Prosecutors are also pressing Barclays, Citigroup, JPMorgan and the Royal Bank of Scotland to plead guilty, people familiar with the matter have said.
In the worldwide investigation into currency-rigging, six banks have already agreed to pay regulators about $4.3 billion.
The Justice Department’s move signals that investigations are giving way to wrangling over issues such as whether the banks plead guilty to antitrust or fraud charges, what behaviors the banks will admit to in settlement documents and how much they will pay.

Bolstering Reserves

Barclays reserved 750 million pounds ($1.1 billion) for the currency settlement in the fourth quarter, bringing its total to 1.25 billion pounds. RBS took a 1.2 billion-pound charge in the same period for conduct and litigation, including a 320 million-pound provision for U.S. currency-rigging probes.
JPMorgan Chase set aside an additional $1.1 billion, pre-tax, for legal expenses in the fourth quarter, without breaking out an amount for the currency settlement. Citigroup added $2.9 billion in the fourth quarter, in part to resolve foreign-exchange probes.
UBS set aside 176 million francs ($175 million) for legal charges in the fourth quarter, after allotting 1.84 billion Swiss francs the previous quarter.
Final settlements often vary significantly from the Justice Department’s initial demands as both sides hammer out an agreement over weeks or even months. During settlement talks for BNP Paribas SA over sanctions violations, penalties ranging from $3.5 billion to $15 billion were floated, according to a person familiar with the discussions. The bank ultimately agreed to plead guilty and pay $8.97 billion.

Singled Out

U.S. prosecutors are seeking a simultaneous settlement with the banks, which would enable the lenders to avoid being singled out for industrywide conduct, people familiar with the matter have said.
The Justice Department had long shied away from seeking guilty pleas from banks over concerns criminal convictions could roil financial markets. However, markets shrugged off guilty pleas last year from Credit Suisse Group AG over helping Americans evade taxes and BNP over sanctions violations.
UBS, which was the first bank to notify U.S. authorities of possible misconduct in the foreign-exchange market, has been granted immunity from prosecution for antitrust violations, a person familiar with the matter has said.
As talks to resolve the U.S. cases advance, the Justice Department and New York’s state banking regulator have opened up a new investigation into whether banks abused a longstanding practice in the currency spot markets known as “last look.” The practice allows banks to back out of unfavorable trades at the last moment.
To contact the reporters on this story: Keri Geiger in New York at kgeiger4@bloomberg.net; Greg Farrell in New York at gregfarrell@bloomberg.net
To contact the editors responsible for this story: Sara Forden at sforden@bloomberg.net Joshua Gallu

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10:28 PM - 11 Mar 2015

Global Currency Soon? China “Actively Communicating with IMF to Include Yuan in SDR Basket Currency”

It looks like things are moving a lot faster than anyone could have imagined.
Last week, reports circulated that China was positioning itself to become the world’s next reserve currency, and even putting up billboards advertising the global importance of the renminbi to travelers in the Asian world.
Now, China is making public moves to make that a formal reality – a process that has been going on behind the scenes at least since the 2008 financial crisis. China’s leaders are reportedly in talks with the IMF about the process of drafting the renminbi into the Special Drawing Rights (SDR) basket of currencies, which include the U.S. dollar, the British pound, the Euro and the Japanese yen.
According to the BRICS post:

China is pushing for the International Monetary Fund to endorse the Chinese yuan as a global reserve currency alongside the dollar and euro.
A senior Chinese central bank official said Thursday that the country is “actively communicating” with the IMF on the possibility of including the yuan, or RMB, in the basket of the Special Drawing Rights (SDRs).
Including the yuan in the SDR system would allow the IMF to recognize the ascent of the world’s second-biggest economy while aiding China’s attempts to diminish the dollar’s dominance in global trade and finance.
“We hope the IMF can fully take into account the progress of RMB internationalization, to include RMB into the basket underlining the SDR in foreseeable, near future,” said Yi Gang, vice governor of the People’s Bank of China.

The timing is no coincidence, as the International Monetary Fund (IMF) is scheduled for an end of 2015 review of its basket of currencies, a process which takes place only twice in 10 years.

China would need to satisfy the Washington-based lender’s economic benchmarks and get the support of most of the other 187 member countries.
“No matter whether and when the RMB will be included in the SDR basket, China will push on with its financial sector reform and opening-up,” Yi said.

The decision to include China’s renminbi in the SDR would be made formally on the basis of the its annual trade volume, and its evaluation status “as a freely usable currency,” among other factors. China should have little trouble here. In 2013, the yuan surpassed the euro to become the second most used trade-financial currency in the world and was recognized by the SWIFT system for reaching the top five world payment currencies as of the end of 2014:

“It is a great testimony to the internationalisation of the RMB and confirms its transition from an ‘emerging’ to a ‘business as usual’ payment currency,” Wim Raymaekers, Head of Banking Markets at SWIFT said in a statement. (source)

Informally, the IMF’s decision is also based on politics, with China’s rise in world power at the forefront, and the increasing significance of the BRICS nations difficult to overstate.
Though it may not be recognized by the average person on the street, these changes have made the renminbi a significant counterweight to U.S. dollar dominance, and signal a tectonic shift away from U.S. hegemony and the decline of the petrodollar’s power.
The coming decision to include China as a major weight of global reserve currency is a huge move, even as many have seen it coming.
The scheme to fade out the dollar as the world’s reserve currency and bring the SDR to the forefront, with the inclusion of the renminbi, has, of course, been in the works for several years at least.
Kurt Nimmo reported on the IMF’s global currency plan as far back as 2010, when the now-defamed Dominique Strauss-Kahn headed the IMF:

“Over time, there may also be a role for the SDR to contribute to a more stable international monetary system,” said Dominique Strauss-Kahn, managing director of the IMF. He said there are some “technical hurdles” involved with SDRs, but he believes they could help correct global imbalances and shore up the global financial system.
[...]
Following the onset of the engineered global financial crisis in 2008, the so-called BRIC countries – Brazil, Russia, India and China – led primarily by Russia and China, have called for dumping the dollar and moving into a global currency scheme. The SDR facility stands ready.
The IMF and the globalists plan to elevate China and undermine the United States. Strauss-Kahn told reporters last June in a news briefing that he believed there would be more pressure to include yuan, also known as the renminbi, among SDR currencies.
Early in 2009, China issued an aggressive call to dump the dollar and move into SDRs.
[...]
The IMF cooked up the SDR scheme in 1969. It was originally intended to be the primary asset held in foreign exchange reserves under Bretton Woods, but after the collapse of that system in the early 1970s – a victim of the bankster plan to send the U.S. deficit into the stratosphere – SDRs took on a far less important role.

How long until we officially have a one world global currency?

These big U.S. companies could be stung by the rising dollar

The rapid rise in the dollar likely will reduce sales and earnings

Bloomberg News/Landov

Seventy eight percent of sales registered at Yum Brands, which owns Taco Bell, Pizza Hut and KFC, come from outside the U.S.

By

Philipvan Doorn

Investing columnist

The U.S. sets many trends. One is central-bank quantitative easing, which along with historically low interest rates, has helped the American economy rebound and supported stock prices.
But with the U.S. moving beyond the money-printing stage of its recovery, and the European Central Bank and Bank of Japan buying bonds hand over fist, the rising dollar poses a threat to sales and earnings for scores of major American companies.
The dollar has risen 14.7% against the euro USDEUR, +1.34%  and 1.4% against the yen USDJPY, +0.11%  this year through Wednesday.
There are 475 U.S. companies included in the S&P 500 Index SPX, -0.61% and 113, or 24%, derived more than half of their most recently reported annual revenue from outside their home country (or outside the U.S. and Canada, or outside North America, depending on how the companies break down revenue).
Many companies are now emphasizing two sets of numbers when reporting revenue. For example, McDonald’s Corp. MCD, +0.10%  said last week that its total “systemwide” sales for February fell 8% from a year earlier, but on a “constant currency” basis, sales (including those from newly opened restaurants) were up 0.5%. Of course, what flows to the bottom line is the unadjusted figure, so the effect of the currency translation could place a major drag on large-cap stocks this year.
During 2014, 68.5% of McDonald’s sales came from outside the United States, which will add to the difficult sales comparisons as new CEO Steve Easterbrook works to revamp the company’s menu.
When analyzing data for S&P 500 companies, one of the problems is that not every company provides enough information to isolate revenue from outside the United States (or, again, outside the U.S. and Canada, or outside North America). So the following list is limited to companies for which data are available from FactSet.
Here are 20 U.S.-based companies in the S&P 500 that derived the highest share of their most recently reported annual revenue from outside their home country:

Company	Ticker	Industry	% annual sales from outside the U.S., or the U.S. and Canada, or North America
Coca-Cola Enterprises Inc	CCE, -2.11%	Beverages: Non-alcoholic	100%
Philip Morris International Inc.	PM, -1.37%	Tobacco	100%
Qualcomm Inc.	QCOM, -1.05%	Telecommunications Equipment	98.6%
Broadcom Corp. Class A	BRCM, -1.01%	Semiconductors	95.7%
Texas Instruments Inc.	TXN, -0.18%	Semiconductors	87.5%
Lam Research Corp.	LRCX, +1.27%	Electronic Production Equipment	86.5%
Altera Corp.	ALTR, +0.34%	Semiconductors	85.5%
Diamond Offshore Drilling Inc.	DO, -3.01%	Contract Drilling	85.1%
Nvidia Corp.	NVDA, +0.13%	Semiconductors	84.5%
Micron Technology Inc.	MU, +2.48%	Semiconductors	84.4%
SanDisk Corp.	SNDK, +0.08%	Electronic Components	82.9%
Intel Corp.	INTC, +0.42%	Semiconductors	82.4%
Microchip Technology Inc.	MCHP, -0.34%	Semiconductors	81.0%
Western Digital Corp.	WDC, -1.39%	Computer Peripherals	80.1%
Mondelez International Inc. Class A	MDLZ, -1.40%	Food: Major Diversified	79.7%
Priceline Group Inc.	PCLN, -2.43%	Travel Services	78.7%
Applied Materials Inc.	AMAT, +1.98%	Electronic Production Equipment	78.3%
Yum Brands Inc.	YUM, -0.42%	Restaurants	77.7%
Corning Inc.	GLW, -0.56%	Electronic Components	76.6%
KLA-Tencor Corp.	KLAC, +0.50%	Electronic Production Equipment	75.9%
Source: FactSet

The point here is not to say that you should expect U.S. stocks to decline because of the dollar’s rapid rise. Far from it. Mark Hulbert made a strong case last month that companies with major operations overseas will also see declining expenses as local currencies decline.
And back in September, William Watts provided a list of reasons why the strong dollar won’t suck the wind out of stocks.
But there’s no question that fourth-quarter earnings for the S&P 500 as a whole were very disappointing, in part because of the rising dollar. And for many of the companies listed above, the quarterly press releases showing comparisons of sales figures are likely to show painful declines during this period of quantitative easing outside the U.S.
If you have a long-term investment in a solid company that does a lot of business outside the United States and are otherwise satisfied with its business strategy, this may not be a sell signal, but you will need to be patient over the next year.

If you believe these “Official Gold” holdings, I have a bridge to sell you

Italy’s debt burden now at record high 132% of GDP

AFP Photo

Italy’s debt load is now €2.1659 trillion, the Bank of Italy said Friday. The country’s public debt increased by €31 billion in January, bringing the total close to the record-high of €2.1677 billion euro recorded in July 2014.
Italy’s public debt is only second to Greece in the eurozone.
The main reason debt spiked in January is because the Treasury increased its available liquidity, or money supply, by €36.3 billion euro, bringing the total to €82.6 billions, Italy’s ANSA news agency reported Friday.
Gross domestic product to debt in Italy is near 132 percent, compared to 127.9 percent in 2013, or 102 percent two years ago. Italy, the third largest economy in Europe, has had its economic woes overshadowed by the looming crisis in Greece.


Source: tradingeconomics.com
Rome hasn’t seen quarterly growth since mid-2011, and the economy is in need of economic resuscitation. Though the European Commission isn’t monitoring Italy as strictly as Greece, Rome’s budget is still under “special surveillance.”The European Commission mandated debt-to-GDP target is 60 percent.
Italy’s growth forecast for 2015 is 0.5 percent, a much rosier picture after the economy’s less than stellar performance in 2014, when growth stagnated in the fourth quarter. In 2016, Italy’s central bank expects 1.5 percent expansion.

Rickards: FED Has Major Conundrum

West Shore Funds Chief Global Strategist Jim Rickards discusses the strong dollar and emerging market fallout with Alix Steel on “Street Smart.” (Source: Bloomberg)
 

 

Debt Goes BALLISTIC in Final Days Before the New Monetary System Emerges!

Sources:
“Greenspan: Stocks not too hot, despite bubble talk”
http://www.cnbc.com/id/102483369#.
“Exclusive: China’s international payments system ready, could launch by end-2015 – sources | Reuters”
http://www.reuters.com/article/2015/0…
“Chinese yuan now top 5 major intl payment currency — RT Business”
http://rt.com/business/227031-yuan-to…
“?Ditching US dollar: China, Russia launch financial tools in local currencies — RT Business”
http://rt.com/business/218315-china-r…
“Too big to save? ‘Vulnerable & exposed’ City unprepared for future banking crisis – MPs — RT UK”
http://rt.com/uk/239057-treasury-unpr…
“UK banks ‘too weak’ to survive another recession — RT UK”
http://rt.com/uk/218491-uk-bank-engla…
“Big Banks Struggle to Pass Fed’s ‘Stress Tests’ – WSJ”
http://www.wsj.com/articles/federal-r…
“CBO: Obamacare Premiums Set to Spike – Tea Party News”
http://www.teaparty.org/cbo-obamacare…

Retail Sales Plummet For 3rd Month In A Row, But All Is Well On Wall Street

Retail Sales Plummet For 3rd Month In A Row, But All Is Well On Wall Street
I thought all those Obama jobs, the millions of Obamacare enrollees getting “free” health insurance, and the plunge in gas prices would lead to billions of excess disposable income being spent on stuff. Considering consumer spending accounts for 68% of GDP, this juggernaut of jobs would propel the US economy to new heights. Keynesianism at its finest. But something went awry on the road to prosperity. The American people have stopped spending money they don’t have on shit they don’t need. The blathering boobs on the tube will use the tried and true weather excuse, except last winter was the winter of the polar vortex. The very same morons who reported that this past winter was the 15th warmest in recorded history, will use cold and snow during winter time as the reason the American sheeple didn’t shop. How could they possibly get to the mall in their leased four wheel drive SUVs, pickups, and minivans?

Retail sales have fallen three months in a row. The last time this happened was at the beginning of the 2008 financial collapse. Do retail sales fall three months in a row when the economy is booming, or does it do that when we are in a recession? And these haven’t been miniscule drops: December -0.9%, January -0.8%, February -0.6%. If we dig into the numbers we can assess the truth of our current situation:

• Retail sales have only grown by 1.7% versus last year. This is far lower than the real level of inflation.
• If you back out the subprime loan juiced auto sales, retail sales have grown by a pathetic 0.8% in the last year.
• The rapidly rising level of auto loan defaults and repossessions is leading to a decline in auto sales, as they fell 2.6% in February versus January.
• All the discretionary retailers – furniture, electronics, building materials – have seen sales fall over the last three months. How could this happen if we are having that strong housing recovery I’ve read about?
• In a positive development, the gas price plunge reversed, and you spent $500 million more for gas in February.
• Department store sales fell again and were $350 million lower than last year. The JC Penney, Sears death march slogs on.
• Things have gotten so bad, people are even drinking and eating out less. Makes you wonder how we can keep adding those Obama jobs – waitresses, bartenders, fry cooks.
• On-line retailing, which used to grow at 10% to 20% rates, has grown by 3.9% YTD. Maybe Amazon isn’t really worth $370 per share. It couldn’t happen to have anything to do with the government sucking the life out of the business by implementing sales taxes.

http://www.theburningplatform.com/2015/03/12/retail-sales-plummet-for-3rd-month-in-a-row-but-all-is-well-on-wall-street/

How’s That Deflation Working Out For You?

The BLS put out their monthly CPI lie last week. They issued the proclamation that inflation is dead. Did you know your costs are 0.1% lower than they were one year ago. They then used these deflation numbers to proclaim your real wages soared last month. It’s all good. The American consumer is so flush with cash, they decided to spend less money for the second month in a row. The Wall Street shysters are so happy with declining consumer spending, declining corporate profits, and a global recession, they pushed the NASDAQ up to 5,000 for the first time in 15 years. Hey!!! That was the year 2000. Things really got better after that milestone.

So we know gasoline prices have plummeted in the last year (but are up 20% in the last month), but I’m trying to think of other things I use in my everyday life that have declined in price. Maybe going through the BLS detailed list will jog my memory. Here is the link to their data:

http://www.bls.gov/cpi/cpid1501.pdf
Let’s see how much deflation we’ve experienced in the last year for things we need to live our everyday lives.
Beef and veal  +22.5%
Ground beef  +21.0%
Steaks  +14.9%
Pork  +7.4%
Ham  +11.5%
Whole Chicken  +6.1%
Fresh Fish  +3.5%
Eggs  +8.2%
Cheese  +7.8%
http://www.theburningplatform.com/2015/03/02/hows-that-deflation-working-out-for-you/

US riled as Britain seeks to join China-backed Asian bank

BEIJING: Unfazed by US protest, Britain has decided to join the proposed China-backed Asian Infrastructure Investment Bank (AIIB), becoming the first Western country to seek membership of the bank in which India and 26 other nations are founding members.

While US officials reportedly complained over the British move saying it has taken a unilateral decision, Chinese Foreign Ministry spokesman Hong Lei welcomed UK's move saying China will follow principles of openness and transparency. ..


Read more http://economictimes.indiatimes.com/articleshow/46555383.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst …

Et tu, Britain? United Kingdom to join China in the anti-dollar alliance

March 13, 2015
Willemstad, Curacao
In another awkward blow to the rapidly waning US-dollar hegemony, America and Britain just had their “It’s not you, it’s me” moment.

Late yesterday, the government of the United Kingdom announced that they would be applying to join the Chinese-led Asian Infrastructure Investment Bank… as a founding member.
This is huge.
Right now, the United States dominates the global financial system.
But after years of endless wars, spying, debt, money printing, bailouts, and insane regulations, the rest of the world has had enough. And they’re looking for an alternative.
China is coming up with an answer.
The soon-to-be-live Chinese International Payment System (CIPS) will provide a way for banks to transfer funds to one another without having to use the US banking system… or the US dollar.
China is also the ringleader behind both the BRICS development bank (called the New Development Bank, or NDB) as well as the Asia Infrastructure Investment Bank (AIIB).
Both of these are multilateral development banks that aim to end the dominance of the western-controlled World Bank and IMF.
NDB includes all the BRICS nations– Brazil, Russia, India, China, and South Africa.
Founding members of the AIIB include China, India, Indonesia, Kazakhstan, Mongolia, etc. They’re typically all rapidly growing and/or resource-rich developing nations.
New Zealand was the first western nation to join AIIB back in October. And yesterday afternoon, Britain announced its intention to become the second.
(Of course in the UK’s eyes they’re the first since New Zealand still belongs to the Queen!)
This is a massive, embarrassing blow to the United States, and to the future of the US dollar.
It’s pretty obvious when you look at the dozens of signatories to the NDB and AIIB charter documents: the rest of the world is sick and tired of the United States dominating the global financial system.
And by putting these new development banks and alternative payment systems together, they’re actually doing something about it.
Even America’s own allies have supported this anti-dollar movement.
Last summer the French Finance Minister explained to reporters how completely unnecessary it was for a European aircraft manufacturer to sell jets to European airlines in US dollars (instead of euros).
He also slammed the US government for arrogantly fining French bank BNP a whopping $9 billion for doing business with countries that the US doesn’t like.
(Side note: one of the ‘evil’ countries BNP did business with was Cuba, and they were heavily punished for this, even though BNP broke no law in France. But now all of a sudden the US and Cuba are buddy-buddy again. Is BNP going to get a refund?)
His conclusion? It’s time for a ‘rebalancing’ of the global financial system away from the US dollar. Other political allies of the United States have echoed similar sentiment.
But now we can see words are turning into action.
Britain might be too polite to tell the US straight up– “Look, you have $18.1 trillion in official debt, you have $42 trillion in unfunded liabilities, and you’re kind of a dick. I’m dumping you.”
So instead they’re going with the “it’s not you, it’s me” approach.
But to anyone paying attention, it’s pretty obvious where this trend is going.
It won’t be long before other western nations jump on the anti-dollar bandwagon with action and not just words.
Bottom line: this isn’t theory or conjecture anymore. Every shred of objective evidence suggests that the dollar’s dominance is coming to an end.
It’s happening. Time to plan for it.

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Germany says Greece may face exit from eurozone

German Finance Minister Wolfgang Schaeuble waits before the start of a meeting of eurozone finance ministers at EU headquarters in Brussels, March 9, 2015. © AFP

Germany’s finance minister says Greece may leave the 19-member eurozone if the administration in Athens fails to clinch a final agreement with its international creditors.
Speaking in an exclusive interview with German-language Austrian public broadcaster, ORF, on Friday, Wolfgang Schaeuble said the possibility of Greece’s departure from the European Union’s monetary bloc cannot be excluded.
“To the extent that Greece is solely responsible and decides what is to happen, and we don’t know exactly what Greek leaders are doing, we can’t exclude it,” he said in reference to an exit from the eurozone by the Greek government.
“Europe is ready to help Greece, but Greece must let itself be helped,” Schaeuble stated.
Meanwhile, the president of the European Commission has said he is not satisfied with the progress in talks over Greece’s bailout loans, but he rejects the possibility that Athens might be forced to exit the eurozone.

“I am not satisfied by the developments in the recent weeks. I don’t think we have made sufficient progress, but we will try to push in the direction of a successful conclusion of the issues we have to deal with,” Jean-Claude Juncker said ahead of talks with Greek Prime Minister Alexis Tsipras in the Belgian capital, Brussels, on Friday.
“I am totally excluding a failure, I don’t want a failure. I would like Europeans to go together. This is not the time for division, this is the time for coming together,” he added.

Eurozone finance ministers agreed on February 24 to give Greece a four-month extension of its international bailout to avert the possibility of the country’s exit from the currency area.
But Athens will not get any of the cash until eurozone partners approve a list of reform measures proposed by Greece.
The Tsipras administration has tried to revise the terms of the country’s €240-billion (USD 270 billion) bailout it received from the troika of international lenders - the European Central Bank, the International Monetary Fund and the European Union - following the 2009 economic crisis.

Last month, Greek Finance Minister Yanis Varoufakis warned that his country’s exit from eurozone would trigger a collapse in the “house of cards.”
“Greece’s exit from the euro is not something that is part of our plans, simply because we believe it is like building a house of cards. If you take out the Greek card, the others will collapse,” Varoufakis told Italy’s national public broadcaster RAI.
MP/HSN/SS

Latest Mystery: Why Consumers Aren't Spending

American Mystery Story: Consumers Aren't Spending Even In a Booming Job Market ... It's an American mystery story: More people have jobs and extra pocket money from lower gas prices, but they aren't buying as much as economists expected. – Bloomberg dominant Social Theme: Happy days are here again. People don't understand it yet.
Free-Market Analysis: Is it really a mystery why people aren't spending? The numbers that the mainstream media uses are "cooked" and thus the conclusions that can be drawn from those numbers are faulty as well.For Bloomberg editorialists the idea that their data is faulty never seems to occur. On the other hand, the head of Gallup recently stated that the employment numbers in the US were far worse than what the government was stating. Perhaps that article didn't get passed around at Bloomberg's editorial desk.So here we go again. This is yet another article that takes government statistics at face value and treats the larger economy in a simplistic fashion. Data in ... results out. The writers are mystified that the data isn't generating the right results.More:The government's count of how much people shelled out at retailers fell in February for a third consecutive month. Payrolls are up 863,000 over the same period.The chart below shows retail sales and payrolls generally move in the same direction, until now. The divergence could portend lower levels of economic growth if Americans' usually reliable penchant to spend is less than what it once was."The expenditures that add up to gross domestic product are coming in a lot softer than employment," said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC. "Why would retailers be hiring if sales are falling? Why would they be boosting hours if sales are falling and why would they be paying more?"Why would retailers be hiring and boosting hours if sales are falling? Perhaps because they are not? Or at least, perhaps because the government figures give an impression of the economy that is rosier than reality?There are excuses, of course. Ben Herzon, a senior economist at Macroeconomic Advisers LLC, believes that the cold weather in February may have depressed consumer spending. He believes that people stayed inside and purchased things online – leading to an upward blip in online buying generally.Herzon also believes that lower gas prices have depressed government statistics regarding sales. In other words, economic activity is GREATER than what's been reported. If this is the case, March should be better than February. Weather is better and gas prices have risen a bit.But mainly, Herzon and others believe the employment figures. The article quotes him as saying, "Payroll employment has been great, and it is generating a lot of labor income that you think would be spent ... Our story would be wrong if it doesn't happen."But who can trust these numbers? Last year, John Crudele at the New York Post published a long expose of US Labor Department manipulations, entitled, "Labor Dept. acts to hide older data in job surveys."The thrust of the article was that the data being collected by government workers was sloppy and inaccurate. Workers wouldn't actually conduct household interviews but fill in their reports with older figures or possibly even make them up.He writes:This whole controversy began when a Philadelphia Census worker, Julius Buckmon, was caught falsifying surveys and — most important — his wrongdoing was covered up.Worse, Buckmon alleged that supervisors told him to cheat.Other Census sources have also told me that data is falsified all the time. And since Census polls for lots of different government agencies, including the Justice Department, the problem could be bigger than anyone can imagine.ZeroHedge posted an article in mid-2014 quoting the Post article but also adding in information from ShadowStats, the research firm that attempts to adjust for US government numbers by using various proprietary formulas.Here:The Federal Reserve would have us believe that the unemployment rate in the U.S. has fallen from a peak of 10.0 percent during the recession all the way down to 6.3 percent now.But according to shadowstats.com, the broadest measure of unemployment is well over 20 percent and has kept rising since the end of the last recession. And according to the Federal Reserve's own numbers, the percentage of working age Americans with a job has barely increased over the past four years...Of course, that was last year. This year, perhaps, things have improved. Or perhaps government numbers have become more trustworthy. (Not likely.)Another possibility – granted that employment numbers are up – is that consumer behavior is simply different after a six-year Great Recession. People are well aware of their precarious financial situations and don't want to spend. They want to save.In any event, we don't find any of this mysterious. The economy probably isn't nearly as good as government numbers claim it is. And consumers generally remain wary of an expansion that could lapse again as it has before.Conclusion:Who can blame 'em? At the very least US government numbers ought to be treated according to that old adage, "Trust but verify."

European Central Bank ‘asphyxiating’ Greece - Varoufakis

Greek Finance Minister Yanis Varoufakis (Reuters / Alkis Konstantinidis)

Greek Finance Minister Yanis Varoufakis said the European Central Bank is holding cash-strapped Athens in a choke-hold in order to push through negotiations on the country’s bailout program.
The European Central Bank has essentially cut Greece off from short-term lending, which makes borrowing more expensive for the already heavily-indebted nation. If Athens doesn’t strike a deal with Brussels, they will lose emergency assistance funding from the ECB.
“The ECB in my opinion is pursuing a policy that can be considered asphyxiating toward our government,” Varoufakis was quoted by Reuters as saying in an interview with Greece’s Mega TV.
Varoufakis is expected to join Prime Minister Alexis Tsipras in Paris on Thursday for talks with the OECD on Athens’s proposed government reforms.

READ MORE: Eurozone backs Greek reforms, enabling €172bn rescue extension
At the same time, officials from the European Commission, the European Central Bank, and the International Monetary Fund are visiting Athens to examine the financial state of the country.
Greece has said it will not request a third bailout, and that is wants to get a reduction on its debt, but European creditors still demand it is paid in full.
The EU came to Greece’s rescue in 2010 and 2014 with two bailouts totaling €240 billion, but saddled Athens with stringent austerity measures.
In February, Greek and eurozone officials agreed to extend the bailout by 4 months. Without more money from the EU, Greece won’t be able to continue chipping away at its massive €316 billion debt.

Gut punch to Germany

Greece has lodged an official complaint with the German finance ministry after Wolfgang Schaeuble described Yanis Varoufakis as “foolishly naive” in his dealings with the media.

Germany’s Bundestag okays Greece’s bailout extension

German Finance Minister Wolfgang Schauble shot back by saying Varoufakis had squandered the trust of the Germans.
“Mr. Schaeuble has told me I have lost the trust of the German government; I have told him that I never had it. I have the trust of the Greek people,” Varoufakis said.
Jens Weidmann, a policymaker at the European Central Bank and head of Germany’s Central Bank, echoed similar views on an interview with Bloomberg News Friday.
Schauble has openly blamed Greece for its own failed banks, and has threatened the European Central Bank could switch off emergency funding.
In the last five years, the Greek economy has lost a quarter of its value, and more than one in three Greeks live below the poverty line. Unemployment continues to hover near 30 percent, and nearly double for the young.

China-IMF talks underway to endorse yuan as global reserve currency

China is pushing for the International Monetary Fund to endorse the Chinese yuan as a global reserve currency alongside the dollar and euro.


A senior Chinese central bank official said Thursday that the country is “actively communicating” with the IMF on the possibility of including the yuan, or RMB, in the basket of the Special Drawing Rights (SDRs).

Including the yuan in the SDR system would allow the IMF to recognize the ascent of the world’s second-biggest economy while aiding China’s attempts to diminish the dollar’s dominance in global trade and finance.

“We hope the IMF can fully take into account the progress of RMB internationalization, to include RMB into the basket underlining the SDR in foreseeable, near future,” said Yi Gang, vice governor of the People’s Bank of China.

However, China will be patient until conditions are ripe, Yi said at a press conference on the sidelines of the ongoing annual parliamentary session.

In late 2015, the IMF will conduct its next twice-a-decade review of the basket of currencies its members can count toward their official reserves.

SDRs are international foreign exchange reserve assets. Allocated to nations by the IMF, an SDR represents a claim to foreign currencies for which it may be exchanged in times of need.

Although denominated in US dollars, the nominal value of an SDR is derived from a basket of currencies, with, specifically, a fixed amount of Japanese yen, US dollars, British pounds and euros, without RMB.

China would need to satisfy the Washington-based lender’s economic benchmarks and get the support of most of the other 187 member countries.

To become a currency included in the SDR basket, the trade volume of goods and services behind that currency will be evaluated, the Chinese Central Bank official explained on Thursday, stressing that RMB has no problem in this regard. But he said views are divided on whether the RMB is a freely usable currency.

“No matter whether and when the RMB will be included in the SDR basket, China will push on with its financial sector reform and opening-up,” Yi said.

The yuan became the world’s No. 2 currency for trade finance globally in 2013, and overtook the Canadian and Australian dollars to enter the top five world payment currencies in 2014, according to global transaction services organization SWIFT.

China said the yuan has also been used as a reserve currency in some countries and regions.
http://thebricspost.com/china-imf-talks-underway-to-endorse-yuan-as-global-reserve-currency/#.VQHIBeEXdmS

Gold Up 11 Per Cent In Euros This Year As Currency Wars Intensify

by GoldCore
- Gold has risen 11% versus the euro in 2015
- Builds on 12% gains against the euro in 2014
- Sentiment poor despite reasonable performance
- Gold performing well considering significant gains in stocks and dollar
- Dollar centric view misleading
- Currency wars intensifying
- Complacency and hubris rife

Gold rose 12% against the euro in 2014 and so far in 2015, gold has risen a further 11% versus the euro. The euro has fallen 23% against gold since January 2014. Gold has risen from EUR 880 per ounce in January 2014 to EUR 1,090 per ounce today.

image: http://www.goldcore.com/ie/wp-content/uploads/sites/19/2015/03/goldcore_bloomberg_chart4_12-03-15.png?38af09
The dollar-centric nature of most financial media and the tendency to focus on gold solely in dollars would give one the impression that gold has been devastated this year.

In dollar terms gold has not fared terribly well, its true, but that is more a function of the surge in the dollar than of weakness in gold. Gold’s performance has been quite good considering the significant strength in the dollar and the gains seen in stock markets.

Gold has an inverse correlation with the dollar and stocks over the long term.
How much longer the stock and dollar boom can continue in the face of deteriorating macro-economic data – the worst since the 2008 crisis – is anyone’s guess. The Federal Reserve, like its other central bank counterparts, has done an incredible job in levitating markets and risk assets thus far.
The dollar has soared against most of the currencies in the world but has only eked out very small gains versus gold. Gold has fallen just 2.7% in dollar terms.
When measured against other currencies, gold has risen versus many major currencies. In fact, it has only suffered modest declines in a few currencies this year. Despite, all the negative gold sentiment against the backdrop of central banks globally racing to debase their currencies.
image: http://www.goldcore.com/ie/wp-content/uploads/sites/19/2015/03/goldcore_bloomberg_chart1_13-03-15.png?38af09

Priced in euros, gold opened the year at EUR 980.52. It quickly spiked to EUR 1,154.94 before what appears to be a 50% retrenchment. It then picked up again and at the time of writing, it is priced around the EUR 1,092 mark. So in Euro terms gold is actually up around 11% this year.

In GBP gold followed roughly the same pattern but did not rebound so well due to recent sterling strength and is currently trading slightly above its price at the start of the year.
We expect qold to be supported in the near term and to rise in the longer term as the ECB lurches into its QE program. The expectation that the ECB will inject massive liquidity into the financial system by buying up bonds en masse has been met with unquestioning enthusiasm.
image: http://www.goldcore.com/ie/wp-content/uploads/sites/19/2015/03/goldcore_bloomberg_chart2_13-03-15.png?38af09

We do not share this enthusiasm. The anticipation of this monetary experiment has already caused the euro to plunge. This should aid exporters in the coming months. But in the longer term it will lead to inflation as importers have to pay more for their raw materials and the public have to pay higher prices for imported goods.

Also of vital importance is that most central banks are involved in competitive currency devaluations.
Therefore, in the medium and long term, currency devaluations will be of little benefit to exporters as most central banks are engaged in the same ‘beggar thy neighbour’ trade and currency wars. So far this year twenty four central banks globally have lowered interest rates in a bid to weaken their currencies to aid their export sectors and create jobs and economic growth.
The haphazard manner in which this QE experiment is being executed in the EU is also concerning. In the absence of a truly centralised central bank it has fallen to national central banks to purchase the bonds that will create a sustainable recovery. The lack of oversight is ripe for abuse of the system.
The experiment has only been in operation for four days and already there are serious questions over whether it can be actually implemented as planned. Due to arcane accountancy rules governing the quality of bonds which may be purchased it appears that there simply may not be enough bonds to meet demand.
Given that the ECB flagged its intention to engage in QE long in advance, the bond markets have already factored in anticipated massive central bank purchases. If it turns out that the central banks cannot buy their expected allocation of bonds it will likely cause chaos in the bond markets.
The uncertainty now hanging over the European bond markets cannot have been alleviated by reports that Greek Finance Minister Varoufakis said on Tuesday that “Greece would never pay back its debts,” which was followed by Prime Minister Tsipras confirming that “Greece cannot pretend its debt burden is sustainable.”
Greece’s future in the Eurozone is still questionable. The BBC is now warning that Greece may be pivoting towards Russia. They report that a “drove of Greek cabinet members will be heading to Moscow” in May, a month before the current bail-out arrangement expires.

Anticipation of ECB QE has also caused European stock markets to rise considerably. These price rises have not been matched by a rise in earnings or dividends indicating a liquidity driven bubble in some European and other indices.

image: http://www.goldcore.com/ie/wp-content/uploads/sites/19/2015/03/goldcore_bloomberg_chart3_13-03-15.png?38af09
By some measures, US stock markets are more overvalued than they were in 2008.
The subprime bubble and meltdown of 2007 has now been surpassed by large bubbles in auto loans, student loans, many tech and biotech stocks, junk bonds and other sections of the bond market.

Compounding the risks is the fact that there is now $8 trillion more in public and private debt in just the United States alone.

The imbalances, distortions and malinvestment that caused the 2008 meltdown are much worse today than they were in 2008. As is the complacency and hubris.
And many of the same people who got us into this mess remain at the helm and are pursuing the same ultra loose monetary policies that got us into the debacle.
Given the risks of today – the euro and other currency QE experiments, competitive currency devaluations, currency wars, bail-ins, stock and bond market bubbles – gold will continue to protect and grow wealth over the long term.
Download Insight: Currency Wars: Bye Bye Petrodollar – Buy, Buy Gold

MARKET UPDATE

Today’s AM fix was USD 1,156.50, EUR 1,091.24 and GBP 779.58 per ounce.
Yesterday’s AM fix was USD 1,161.25, EUR 1,094.90  and GBP 774.48 per ounce.
Gold fell 0.06% percent or $0.70 and closed at $1,153.30 an ounce yesterday, while silver climbed 0.45% or $0.07 to $15.57 an ounce.
image: http://www.goldcore.com/ie/wp-content/uploads/sites/19/2015/03/goldcore_bloomberg_chart5_13-03-15.png?38af09

In Singapore, bullion for immediate delivery inched up 0.5 percent to $1,159.30 an ounce near the end of day trading.  The yellow metal has seen nine straight sessions of losses which equates to its longest losing streak since August 1973, when it fell for ten consecutive days.

 In London, spot gold is trading at $1,156.88 or up 0.24 percent. Silver is down 0.49 percent at $15.56 and platinum is up 0.45 percent at $1,123.42.
Gold Sentiment Very Poor As Speculators Sell Yet Bullion Demand Robust

Gold looks to be headed for its sixth weekly drop in seven weeks. Sentiment towards gold is quite negative after the recent price falls.
Gold has been pressurised by liquidations from the more speculative side of the market – with ETFs and in the futures market. Holdings in the SPDR Gold Trust, the world’s largest gold exchange-traded fund, fell 0.28 per cent to 750.95 tonnes on Thursday – the lowest since late January.
image: http://www.goldcore.com/ie/wp-content/uploads/sites/19/2015/03/goldcore_bloomberg_chart4_13-03-15.png?38af09

Unusually, the fund hasn’t seen any inflows since February 20 – see chart on flows into the ETF, and how it’s been tracking gold prices, although gold has fallen by much more than the ETF holdings.

Gold is weaker and yet, there has been very little liquidations of physical coins and bars and bullion demand in China and India remained robust in recent weeks and actually picked up this week.

Premiums in India remain close to $2 and in China they remain over $5 per ounce.
Reuters report that traders in Asia spoke of robust demand this week. “Demand has increased a little bit because of the drop in prices but there is no big rush,” said Bachhraj Bamalwa, director at the All India Gems and Jewellery Trade Federation.
Asian buyers again are using weakness in gold and silver prices to accumulate bullion.
U.S. Mint figures show demand has been robust in March. Sales of gold American Eagle coins by the U.S. Mint have been strong, already almost matching last March’s total (at 20,500 oz so far this month, vs 21,000 oz last year) and outstripping February’s (18,500 oz).

Silver American Eagle sales aren’t doing so well, however. Sales total 1.3735 million so far this month, compared to 3.022 million oz in February and 5.354 million oz in March 2014.
Interestingly, according to Amanda Cooper of Thomson Reuters posting in the Global Gold Forum:
“Until yesterday, gold had fallen for 8 days in a row, which is pretty steep going even for the gold market when it gets gloomy. The last time gold fell that many days in a row was March 2009.
A closer look at the chart reveals that gold has only ever fallen by that many days in a row three times since the gold standard was abolished in the 1970s. Since Reuters gold data began in 1968, gold has only fallen for 9 days once, back in August 1973.”
It is worth noting that in the months following the 8 days of falls in 2009, gold prices surged.Gold rose from $892 per ounce in March 2009 to over $1,200 per ounce just 8 months later in November 2009. This was a rise of nearly 35%. A similar rise today would see gold rise from $1,155 per ounce today to over $1,550 per ounce.

Caveat emptor and past performance is no guarantee of future returns.

It takes a brave or foolish investor to buy after such price falls and we always caution never to “catch a falling knife.”
However, an attractive buying opportunity looks set to soon present itself.
Dollar, pound and euro cost averaging into a physical position remains prudent.
Updates and Award Winning Research Here

Marc Faber: The Fed Is As Clueless As Everyone Else Who Watches CNBC

What Happens to the Stock Market if the U.S. Follows the World into Recession?

by Charles Hugh-Smith
History is rather unkind to blind faith in central banks, just as the rising U.S. dollar and stagnant sales are being very unkind to corporate profits.
The quasi-religious faith that central banks can push stock markets ever higher regardless of real-world realities may well be tested in 2015-2016. The global economy spiraling into recession (a.k.a. a period of slow growth–heh) raises two questions:

1. Can the U.S. economy decouple from the global economy, i.e. keep expanding production, sales, income and payrolls while the rest of the global economy falters?

2. What happens to the U.S. stock market if/when the U.S. follows the rest of the world into recession?
My colleague Dave P. at Market Daily Briefing has posted information on a recession detector based on the work of economists Chauvet and Piger.
In essence, the model considers four data series: real personal income, nonfarm payrolls, industrial production and real final sales (as a percentage of change). If all four are rising, the probability of recession is low.
If all four roll over and decline, the probability of recession (generally defined as a decline in gross domestic product for two consecutive quarters) approaches 100%.
This makes intuitive sense: if personal income, industrial production, real final sales and payrolls are all declining, how can GDP continue expanding?
For context, let’s start with a chart I published earlier this week of new manufacturing orders–which look unambiguously recessionary:
image: http://www.oftwominds.com/photos2015/new-orders2-3-15a.png

Here is a chart of real final sales (as a percentage of change) and the S&P 500 (SPX). The percentage of change of real sales declined for four years in the 2000s while the stock market soared–a remarkably long-lasting divergence.

Note that real final sales remained in positive territory (i.e. were still expanding, albeit at a pace of 1% or so) even as the U.S. economy slid into recession in early 2008.
image: http://www.oftwominds.com/photos2015/retail-sales3-15.png

Industrial production has yet to roll over–but this may be merely a time lag in the data, as it’s difficult to see how the recent drop in oil/gas employment won’t eventually show up in industrial production as wells are capped and drilling rigs are idled.

image: http://www.oftwominds.com/photos2015/indpro-SPX3-15.png

Many aspects of manufacturing are dependent on either global growth or the expansion of highly risky debt–for example, subprime auto loans. What happens to auto sales when the subprime auto loan bubble bursts?

Payrolls have also been rising steadily for over five years–a period of time that exceeds the previous expansion of nonfarm employment in the 2000s. By any measure, the current period of payroll expansion is long in tooth.
image: http://www.oftwominds.com/photos2015/payrolls-SPX3-15.png

Put another way–how many more millions of waiters/waitresses/bartending jobs can the U.S. economy generate? How many jobs are dependent on exports, which are being pressured by the soaring U.S. dollar? What happens to job growth as corporate profits plummet?

I didn’t publish the personal income chart because this data series is highly suspect, for reasons explained by Zero Hedge in The Mystery Of America’s Missing Wage Growth Has Been Solved: the wages of the lower 4/5ths of the employed are stagnant or down; only the top 20% registered any gains in real income.
There is undoubtedly a Pareto distribution in these gains, meaning 80% of the income gains enjoyed by the top 20% went to the top 20% of that 20%: in other words, most of the income gains went to the top 5% of the managerial/technocrat class–it was not evenly distributed to the entire top 20%.
What predictive value is there in income data when the vast majority of the income gains have flowed to the top 5%, a few crumbs thrown to the next 15% and the bottom 80% received no real gains in income or actually saw their income decline in real terms?
Regardless of income, history shows that stocks crater when payrolls, industrial production and real final sales all tank. The current euphoria for stocks has several components: one is soaring corporate profits, and the other is quasi-religious faith in the power of central banks to keep stocks lofting higher in a complete disconnect from fundamentals such as sales, profits, production or payrolls.
History is rather unkind to blind faith in central banks, just as the rising U.S. dollar and stagnant sales are being very unkind to corporate profits.