The Mess That Greenspan Made - Part 40

Prices for both gold and silver rose for the third straight week, the first time this has happened in a year-and-a-half, as demand for precious metals continues to stabilize in the West while physical demand in the East remains strong. The latest data from the World Gold Council showed record gold demand from China last year as investors in the West sold, however, many analysts say Chinese demand is understated by a wide margin.

Gold and SilverThe technical picture for precious metals remains positive, and this was aided by weak economic data that bolstered the case for the Federal Reserve to go slow in tapering its massive money printing effort. Some Western analysts now see higher metal prices ahead, however, while U.S. investors are clearly no longer bearish, recent metal ETF flows indicate they are not yet very bullish.

After dipping at mid-week after the release of the January Fed meeting minutes, precious metals ended the week on a strong note. Part of the late-week surge was due to renewed safe haven demand stemming from violence in the Ukraine, however, there is a growing consensus that recently weak economic data in the U.S. and elsewhere may not be due solely to bad winter weather, in which case, the Fed may have to rethink its tapering plans.

The central bank doesn’t exactly have a sterling track record in predicting turns in the U.S. economy and, if the plunge in Citigroup’s Economic Surprise Index shown below is any indication, they might already be behind the curve again.

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The Russians Have a Sense of Humor

We didn’t watch much of the 2014 Winter Olympics Closing Ceremonies last night but we did get to see the Russians poke fun at themselves for the glitch in the opening ceremonies that resulted in one of the five mechanical Olympic rings failing to expand.

This time, it was more than a hundred people on the ground who were instructed to temporarily mimic the mechanical glitch of the fifth ring as shown below.

Of course, the Russians probably aren’t laughing about what’s been going on in the Ukraine in recent days as the Putin-backed government was ousted over the weekend. The Russians won the medal count by a fairly wide margin over the U.S., Norway, and Canada, but the body count in Kiev overshadowed the games.

This Spiegel commentary looks back at the last two weeks and attempts to gauge the lasting impacts of the games in Sochi and the unrest in the Ukraine while noting that the Olympic games almost always involve politics somehow.

Monday Morning Links

MUST READS
Euro-zone inflation falls at record speed – MarketWatch
G20 pledges to add $2 trillion to global economy – CNN/Money
Yellen Wins G-20 Praise as Emerging Markets’ Angst Eased – Bloomberg
Ukraine calls for aid, says needs $35 billion in next two years – Reuters
Ukraine Bond Rally Seen Tied to New Aid Amid Default Concern – Bloomberg
Osborne: EU ready to provide financial aid to Ukraine – Channel News Asia
BOE and the Fed Encouraged Interest Rate Manipulation – Washington’s Blog
Curriencies, Carry Trades, Fat Pigs and Pythons – Noland, Prudent Bear
Mt. Gox CEO resigns from Bitcoin Foundation board – MarketWatch
This Is the Age of Fairy-Tale Economics – Real Clear Markets
What Was Tim Geithner Looking at in January 2008? – WCEG
Federal Reserve Minutes Reveal “Ignorance” – Sense on Cents
Mixed Grades at Best For NY Fed in 2008 – WSJ

MARKETS/INVESTING
Stocks: Steady start to the week – CNN/Money
Markets drift amid Chinese property fears – AP
A World of Manipulated Markets – Dollar Collapse
Emerging Stocks Decline With Copper as Natural Gas Surges – Bloomberg
U.S. stock market is starting to ride a tech M&A wave – MarketWatch
Corporate Bond Spread vs. Treasuries Near Six-Year Low – Bloomberg
Gold Entering A ‘New Turning Point,’ Say Analysts – Kitco
Commodities conundrum: As good as gold may not hold true – The Standard
Can physical demand boost gold during traditionally dour March? – Mineweb
Barclays is bullish on Gold: Target 1362, 1416 – BullionStreet
FT: Gold Price Rigging Fears Put Investors On Alert – GoldCore

ECONOMY/WORLD/HOUSING/BANKING
Is economy merely suffering from a cold? – MarketWatch
The US manufacturing recovery: Uptick or renaissance? – voxeu
Draghi: ECB Prepared to Add Stimulus on Deflation Risks – Bloomberg
German business confidence hits 2.5-year high – Channel News Asia
Cyprus: Striking power workers scuffle with police – AP
Greece ‘very close’ to bailout agreement with troika – ekathimerini
China’s home price rises ease for first time in 14 months – Reuters
Housing Weakness: Temporary or Enduring? – Calculated Risk
Debating the Recent Weakness in Housing – S&P Housing Views
Can The Fed Stop The Next Recession? Business Can’t Bank On It – Forbes
NABE economists divided over pace of Fed tapering – AP
In a Dark Year, a Lighter Side at the Fed – NY Times

 

From this Pew Research report earlier in the month comes more evidence of the nation’s growing income inequality and how, if you’re not going to foot the bill for a four-year college degree, you probably shouldn’t bother with college at all.

That really is an astounding widening of the wage gap from the Silents (don’t know why I’ve never heard that term before) to the Millenials. Moreover, if college costs weren’t so crazy- high these days (leaving many who attempt a four-year degree and fail with no well-paying job and a big pile of debt) this wouldn’t be such a big deal, but, since they are, it is.

There’s lots more interesting data in the report and none of it is good.

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