Icahn, Soros, Druckenmiller, And Now Zell: The Billionaires Are All Quietly Preparing For The Plunge

"The stock market is at an all-time, but economic activity is not at an all-time," explains billionaire investor Sam Zell to CNBC this morning, adding that, "every company that's missed has missed on the revenue side, which is a reflection that there's a demand issue; and when you got a demand issue it's hard to imagine the stock market at an all-time high." Zell said he is being very cautious adding to stocks and cutting some positions because "I don't remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people's thinking." Zell also discussed his view on Obama's Fed encouraging disparity and on tax inversions, but concludes, rather ominously, "this is the first time I ever remember where having cash isn't such a terrible thing." Zell's calls should not be shocking following George Soros. Stan Druckenmiller, and Carl Icahn's warnings that there is trouble ahead.

Billionaire 1: Sam Zell

On Stocks and reality...

"People have no place else to put their money, and the stock market is getting more than its share. It's very likely that something has to give here."

"I don't remember any time in my career where there have been as many wildcards floating out there that have the potential to be very significant and alter people's thinking," he said. "If there's a change in confidence or some international event that changes the dynamics, people could in effect take a different position with reference to the market."

"It's almost every company that's missed has missed on the revenue side, which is a reflection that there's a demand issue," he said. "When you got a demand issue it's hard to imagine the stock market at an all-time high."

He also lamented about how difficult it is to call a market top. "If you're wrong on when, that's a problem." His answer: "You got to tiptoe ... and find the right balance."

"This is the first time I ever remember where having cash isn't such a terrible thing, despite the fact that interest rates are as low as they are," he added.

On Obama and inequality...

"Part of the impact of these very, very low interest rates is that we've creating this disparity. The wealthy are benefiting from government policy and the nonwealthy aren't," he continued. "So we have a president who says we've got to fight this disparity and we have a Fed who's encouraging it everyday."

On Tax Inversion...

"This is both legal and accepted. If the government doesn't like the result, change the law," he said. "You have to have a rational tax policy." He said the top tax rate should be changed and the U.S. should not tax worldwide income.

Zell also said it's unfortunate that "this inversion thing has been captured as a political, electioneering item."

Source: CNBC

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Billionaire 2: George Soros

Soros has once again increased his total SPY Put to a new record high of $2.2 billion, or nearly double the previous all time high, and a whopping 17% of his total AUM.

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Billionaire 3: Carl Icahn

Ironically, Carl Icahn - poster-child of the leveraged financial engineering that has overtaken US equity markets on the back of Central Bank largesse - told CNBC that he was "very nervous" about US equity markets. Reflecting on Yellen's apparent cluelessness of the consequences of her actions, and fearful of the build of derivative positions, Icahn says he's "worried" because if Yellen does not understand the end-game then "there's no argument - you have to worry about the excesssive printing of money!"

*  *  *

Billionaire 4: Stan Druckenmiller

Simply put, Druckenmiller concludes, rather ominously, "I am fearful that today our obsession with what will happen to markets and the economy in the near term is causing us to misjudge the accumulation of much greater long term risks to our economy."

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And here the BIS explains broken markets so easily, even a Janet Yellen can get it:

Financial markets have been exuberant over the past year, [...] dancing mainly to the tune of central bank decisions. Volatility in equity, fixed income and foreign exchange markets has sagged to historical lows. Obviously, market participants are pricing in hardly any risks.

Growth has picked up, but long-term prospects are not that bright. Financial markets are euphoric, but progress in strengthening banks’ balance sheets has been uneven and private debt keeps growing. Macroeconomic policy has little room for manoeuvre to deal with any untoward surprises that might be sprung, including a normal recession.

*  *  *

So now we have a quorum of billionaires and the BIS all flashing warning signals which can only mean one thing: stocks are undervalued so buy, buy, buy...

And The Best Performing Asset In August Was...

August is the month in which the third try for a global economic recovery officially snapped, with first China, then Europe and finally Latin America succumbing to pre-recession forces and/or outright contraction. Which, in the New Normal, is great news as it means more hopes for even greater imminent central bank easing and "stimulus" if only for the wealthiest (and also please ignore the fact that 6 years of more of the same has not worked, this time will be different). Which explains why August, otherwise the sleepiest month of the year, proved to be fairly strong with both equities and bonds moving higher in tandem.

In fact, the situation in Europe is so dire, that European government bonds yields reached/retested their record multi-century all time lows. As Deutsche Bank summarizes, the 10yr government bond yields for Germany, France, Italy, Spain, and Switzerland declined by 27bp, 28bp, 26bp, 28bp and 11bp in August to 0.89%, 1.25%, 2.44%, 2.23% and 0.44% respectively. From a total returns perspective, a 2% gain in August was the best monthly performance for Bunds and OATs since January which brings their YTD gains to around 8-9%. Not bad in the context of a 7% and 4% YTD gains in Stoxx 600 and the FTSE 100. Italian and Spanish government bonds are still ahead though on a YTD basis with total returns to date at around 12-13%. Staying in rates, US Treasuries were somewhat of a laggard relative to its European peers in August with a monthly return of around 1.2%. Nonetheless, it was still the biggest gain for Treasuries since January and the outperformance in long bonds has also driven the 10s/30s curve to its flattest since June 2009. The search for yield has also benefited Credit on both sides of the Atlantic. Total returns were positive across the main European, US and Sterling credit benchmarks although the highlight was a rebound in US HY. The asset class gained +1.8% in August after having lost 1.7% in July as outflows steadied and reversed as the month progressed.

DM equities were generally higher but the highlight goes to the S&P 500 (+4%) after having made its first crossing of the 2,000 mark in August. Performance was more mixed in Europe but generally still moderately positive. EM equities had another decent month with the MSCI EM index enjoying a 2% plus return for the fourth consecutive month. Commodities were the key losers in August. The CRB index (-0.6%) finished lower for its second consecutive month. Copper, WTI, Brent, Sugar, Silver were all between 2%-6% lower. The fact that Oil prices have now gone officially negative for the first time in 2014 despite the ongoing geopolitical tension is perhaps telling us something?

But nowhere is the humor of central planning better exhibited than in Brazil was a clear outperformer with the BOVESPA (+10%) posting its best monthly performance since January 2012. Why? Because Brazil just entered a recession. Perhaps the reason why the joke that global thermonuclear war will send futures limit up is funny, is because it's true...

August return by asset class:

And YTD:

Source: Deutsche Bank

US Troops Are Heading To Ukraine

While only 'humanitarian adviser' boots on the ground are present in Iraq (and Syria), Reuters reports that preparations are under way near Ukraine's western border for a joint military exercise this month with more than 1,000 troops from the United States and its allies. As Obama told reporters last week, "that a military solution to this problem is not going to be forthcoming," it seems a little odd 'strategically' to go ahead with the Rapid Trident exercise Sept. 16-26 as a sign of the commitment of NATO states to support non-NATO member Ukraine, entailing the first significant deployment of U.S. and other personnel to Ukraine since the crisis erupted.

As Reuters reports,

As fighting between the army and Russian-backed rebels rages in eastern Ukraine, preparations are under way near its western border for a joint military exercise this month with more than 1,000 troops from the United States and its allies.

The decision to go ahead with the Rapid Trident exercise Sept. 16-26 is seen as a sign of the commitment of NATO states to support non-NATO member Ukraine while stopping well short of military intervention in the conflict.

...

"At the moment, we are still planning for (the exercise) to go ahead," U.S. Navy Captain Gregory Hicks, spokesman for the U.S. Army's European Command said on Tuesday.

...

But Rapid Trident will entail the first significant deployment of U.S. and other personnel to Ukraine since the crisis erupted.

...

"It is very important to understand that a military solution to this problem is not going to be forthcoming," Obama told reporters at the White House last week.

...

The United States European Command (EUCOM) says the exercise this month will involve about 200 U.S. personnel as well as 1,100 others from Ukraine, Azerbaijan, Britain, Canada, Georgia, Germany, Latvia, Lithuania, Moldova, Norway, Poland, Romania and Spain.  

Focused on peacekeeping, it will include command post drills, patrolling and dealing with improvised explosive devices.

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Sounds like de-escalation to us... buy moar stocks.

China Services PMI Jumps Most On Record To 18-Month Highs

While Markit's Manufacturing PMI fell in August, the apparent demand for 'services' in China exploded. China Services PMI jumped from the worst on record 50.0 in July to 54.1 in August (18-month highs). This is the biggest MoM rise in the data on record... because they can. We have nothing to add because it's simply becoming too surreal and manipulated for rational explanation.

HSBC is quick to note that it's not all unicorns and ponies and that more stimulus sis till needed.

“The headline HSBC China Services PMI rebounded to a seventeen-month high of 54.1 in August, after registering an all-time low reading in July. Apart from the rebound in the headline number, other indices suggest a mixed picture rather than a broad-based improvement. The economy still faces downside risks to growth in the second half of the year from the property sector slowdown. We think policy makers should use further easing measures to help support the recovery.”

Zinc hits 4-week peak, aluminium up as funds buy

 Zinc climbed to a four-week high and aluminium neared an 18-month peak on Tuesday in markets driven by momentum-based speculators and computer-driven funds.

But analysts cautioned that both zinc and aluminium prices were moving ahead of supply/demand fundamentals as inventory levels remain high.

Aluminium prices, which have gained 13 percent over the past two months, have also been supported recently by one investor holding a large position of inventories and short-dated futures.

Three-month zinc on the London Metal Exchange closed at $2,378, up 0.9 percent, after touching a session high of $2,391.25, the strongest since Aug. 5.

"The big issue for me is that you've been seeing Chinese refined zinc production surging quite sharply since June, yet you have a relatively weak end-user sector in terms of construction activity," David Wilson, an analyst at Citi in London, said.

"Zinc has probably one of the biggest exposures to residential construction activity of any of the metals."

While investors are betting on shortages developing due to mine closures, inventories of zinc in LME-approved warehouses are giving the opposite signal, having surged by 13 percent over the last month to 739,400 tonnes.

Spot prices trading at a premium to the benchmark suggests more zinc could be delivered into LME inventories in coming weeks, broker Triland said. LME zinc cash traded at a $1.75 premium to benchmark prices, the highest in a month.

ALUMINIUM

LME benchmark aluminium closed 0.6 percent higher at $2,107 a tonne, trimming gains after touching a session high of $2,116, within shouting distance of last week's peak of $2,119.50 which was its most expensive since February 2013.

"We're surprised how far prices have risen," said analyst Ivan Szpakowski of Citi in Shanghai.

"A lot of it has been driven, we think, by CTAs (commodity trade advisers), momentum traders, and also macro trading on the more positive views of global economic growth. So, we don't think it's been as driven by fundamental factors. Our expectation is that prices bounce back lower."

Consumers have been restricted from accessing global stockpiles partly due to logjams at exchange warehouses.

Wilson said aluminium prices have been supported by one party holding up to 80 percent of LME stock warrants

"That's clearly supportive of the front end of the market, but whether it's a reflection of the real physical market, I'm not so sure," he said.

Also fuelling interest in aluminium and zinc were expectations that central banks in Europe may be forced to act to shore up their economies after weak economic data.

On Tuesday, euro zone producer prices fell the most since April, underlining dis-inflationary pressures in the single currency area ahead of the European Central Bank's monetary policy meeting on Thursday. 

"If we see more stimulus from the ECB, which is looking more and more likely, that's going to be a boost to commodity markets ... and it's helping to offset some of the more negative economic signals at the minute," said analyst James Glenn of National Australia Bank in Melbourne.

LME copper closed 0.5 percent higher at $6,973 a tonne, after losses of 0.6 percent in the previous session when it fell near support at $6,913.25 a tonne, the trough from Aug. 28, which was its weakest since Aug. 20.

Nickel ended 1 percent lower at $18,550 a tonne. brushing off threats of greater sanctions on Russia, one of the world's top producers of the metal, even though sister metal palladium has soared to a 13-1/2 year top.

Worries that sanctions could restrict supply of nickel , used in stainless steel, helped boost prices earlier this year.

Lead ended at $2,239 a tonne, up 0.3 percent and tin closed 0.5 percent lower at $21,515.

MCX-zinc (₹144): BUY

The zinc futures contract traded on the Multi Commodity Exchange (MCX) has rallied strongly over the last three months.

The contract has risen over 17 per cent from ₹122.4 a kg in May to ₹144. Increase in demand coupled with a sharp fall in inventories is supporting the price rise.

According to the data from the International Lead and Zinc Study Group, , the market for zinc ran into a deficit for the first time in 2013 after many years.

Also, the deficit has widened to 2,34,000 tonnes in the first half of this year, which is much higher than the 94,000 tonnes deficit recorded for the entire 2013. Widening deficit is expected to limit the downside and could push the price further higher in the coming weeks.

Moving in tandem with the global zinc price, the MCX-zinc futures contract witnessed a sharp rally in the months of June and July. Subsequently, this rally took a pause and the contract has been on corrective consolidation since August.

The price action in the last two weeks of August suggests that the consolidation could be nearing its end. The contract appears to be gearing up for a fresh leg of up move.

This offers traders with a short-term perspective a good opportunity to initiate fresh long position in the contract.

Short-term view: The short-term outlook for the MCX-zinc futures contract is bullish.

The contract’s corrective fall from the August high of ₹146.95 found support at ₹137.6 – the 38.2 per cent Fibonacci retracement level.

An upward reversal from this support level has thereby kept the uptrend intact. The 21-day moving average level at ₹142 is the immediate support for the contract. Key short-term support is at ₹137.6. There is no danger for the short-term bullish outlook as long as the contract trades above this level. Resistance is at ₹147. A strong break above this level can take the contract higher to ₹155. Traders with a short-term horizon can initiate fresh long position at current levels. Stop-loss can be kept at ₹136 for the target of ₹154.

The short-term outlook will turn negative if the contract falls below ₹137.6 decisively. The ensuing target on such a fall will be ₹130.

Medium-term view: The medium-term outlook is also bullish for the contract. It has been trading in a bull channel for more than a year. Key medium-term support is at ₹130 which is also the channel support level.

While the contract trades above this level, a rally to ₹163 is possible over the medium-term. Traders with a medium-term perspective can consider holding their long positions with a wide stop-loss at ₹129 for the target of ₹162.

Intermediate declines to ₹130, if happens can be considered for accumulating long positions.

The medium-term outlook will be mitigated if the contract records a strong close below ₹130. The next target will be ₹121.

Putin Calls For "Immediate Talks" Over Eastern Ukraine "Statehood"

Vladimir Putin, who has repeatedly said that he does not favor the break-up of Ukraine - but only greater autonomy for the East, appears to have changed course rather dramatically today. In a speech broadcast on Russian TV, the Russian leader stated "we need to immediately begin substantive talks... on questions of the political organisation of society and statehood for southeastern Ukraine." As The Washington Post reports, use of the word "statehood" reflects a major shift in Kremlin policy towards 'Novorossiya' - it would be a direct challenge not only to Kiev but also to Western European nations and the United States, which have been trying to force Moscow to back down. While not directly addressing the latest round of sanctions chatter, Putin concluded, perhaps ominously, "they should have known that Russia cannot stand aside when people are being shot almost at point-blank."

As AFP reports,

President Vladimir Putin today dramatically raised the stakes in the Ukraine conflict by calling for the first time for statehood to be considered for the restive east of the former Soviet state.

"We need to immediately begin substantive talks... on questions of the political organisation of society and statehood for southeastern Ukraine with the goal of protecting the lawful interests of the people who live there," Putin was quoted as saying by Russian news agencies on a TV show broadcast in the far east of the country.

Russia has previously only called for greater rights under a decentralised federal system to be accorded to the eastern regions of Ukraine, where predominantly Russian-speakers live.

And as The Washington Post reports,

Putin spoke of the need to end hostilities before winter and criticized European leaders for supporting Ukraine, in remarks made during a television interview first broadcast in Russia's Far East and reported from Vladivostok by Russian news agencies. The interview was to be broadcast in Moscow seven hours later.

Putin has said repeatedly that he does not favor the breakup of Ukraine — though Russia seized Crimea from Ukraine in March — but only greater autonomy for the east. The word "statehood" suggests more than that, and if it reflects a major shift in Kremlin policy, it would be a direct challenge not only to Kev but also to Western European nations and the United States, which have been trying to force Moscow to back down.

...

"These are the inclusive talks that should determine the relationship with the eastern regions, that is, negotiations inside Ukraine on the internal Ukrainian order with respect for the interests of the country's eastern regions, the interests of Novorossiya," Peskov told reporters, according to Russian state-owned news agency Itar-Tass.

*  *  *

Doesn't sound very de-esacalation-y to us... but we are sure stocks will rally on the hopes of front-running the post-escalation de-escalation buying panic.

Middle-East 'Frenemies'

The enemy of your enemy is your... frenemy; and so it is across the Middle East as the WSJ notes the spread of The Islamic State has united many parties once at odds with each other to become 'strange bedfellows'.

Strange Bedfellows
Parties that display friction or outright aggression toward one another are finding themselves aligned in a desire to counter Islamic State.

Groups of colored lines between parties represent shared interests.

U.S. and Iran
The U.S. and Iran share an interest in fostering an Iraqi government strong enough to fend off Islamic State.

U.S. and Syria
The U.S. and Syria’s Bashar al-Assad share an interest in quashing Islamic State in Syria, even if the regime appears to put a higher priority on fighting other rebel groups.

Israel and Egypt
Israel and Egypt have come together to oppose Hamas, and they now have a similar long-term interest to do the same in confronting Islamic State.

Syria, Kurds, Turkey and Iraq
Turkey and Syria, long fearful of building up the region’s Kurds, have a shared interest in building up the Kurdish Peshmerga to combat a more immediate threat, Islamic State. Iraq has acquiesced.

Turkey and Qatar
Turkey and Qatar suddenly have a shared interest in keeping the Islamist movement they separately helped foster in check before Islamic State absorbs and consolidates it.

Iran, Saudi Arabia and Iraq
Saudi Arabia supported Sunnis in Iraq while Iran supported Shiites. They now have an interest in aiding the Shiite-led Iraq government to counter a common threat.

U.S., China and Russia
Russia and China have plenty of disputes with the U.S., but they agree that, as big powers, they are threatened in similar fashion by the expansionist Islamic extremism of Islamic State.

U.S., Egypt, Qatar and Turkey
Egypt’s military ruler sees Qatar, Turkey and the U.S. as hostile to his suppression of the Muslim Brotherhood. They all now fear Islamic State will consolidate the Islamic threat.

U.S. and al Qaeda
The greatest odd bedfellow of all: Islamic State threatens al Qaeda as well as the West, meaning that, in fact, al Qaeda and the U.S. now have a shared enemy. 

Full Wall Street Journal interactive chart here...

China HSBC/Markit Manufacturing PMI for August, 50.2 expected 50.3

 China HSBC/Markit Manufacturing PMI for August, 50.2 

expected 50.3, prior was 51.7, flash reading was 50.3 (to a 3-month low)

India's GDP External Debt Graphics

The Fall Is Golden For Bullion Bulls

September is the hottest month of the year for gold prices, rising on average 3% over the past 20 years. As the yellow metal tests hovers off 2-month-lows, Bloomberg notes that "Indian jewelers and dealers will be stocking up in the coming weeks," ahead of the festival period, which runs from late August to October (andis followed by the wedding season) when bullion is bought for part of the bridal trousseau or in jewelry form as gifts from relatives. As GoldCore's Mark O'Byrne notes, "a lot of traders are aware of this trend towards seasonal strength... They tend to buy and that creates momentum."

Chart: Bloomberg

Some color on the week's Precious Metals Trading from Alasdair Macleod of GoldMoney,

The pattern of trading in precious metals changed for the better this week. After London's bank holiday on Monday, for the first time in a long time the market opened in London's pre-market with higher prices. This indicated Asian or Middle-Eastern physical demand was returning to the market. Predictably, prices drifted lower during London hours as paper trading took over, and all the gains were more or less lost by close of play on Comex in New York.

It was a similar story on Wednesday. Yesterday, (Thursday) started the same way, but this time the move gained more traction; but volumes remain pitifully low, in common with open interest. Today this pattern was not repeated with gold kicking off unchanged on overnight levels. However, gold is up $15 on the week and feels more firmly based.

Measured by deliveries on the Shanghai Gold Exchange, Chinese demand is increasing, with last week's figure rising to 46 tonnes, having increased every week in August. So far this year over 1,200 tonnes have been delivered, and the extension of trading and therefore potential demand into the Free Trade Zone is due to kick off in September.

The chart of the gold price and open interest on Comex is shown below.

August is a notoriously poor trading month, with traders in the northern hemisphere on holiday, or at least not thinking about markets. September is wake-up time, and statistically the best month for gold. Will this be the pattern this year?

Trading in silver continues to be healthier, even if the price performance has been disappointing, with the gold/silver ratio rising to 66 from 63 earlier in the month. Open interest had its first significant fall on Wednesday, when the price rose marginally. This suggests that on balance there is some bear closing in futures. The action is shown in our next chart.

Could this be a harbinger of better times? Quite likely: being mostly an industrial metal, there is some evidence that commercial users are locking in low prices by holding futures positions. Bear in mind that two years ago, users probably estimated silver prices at $35+ in their business plans, so current prices for them are too good to miss.

Quick side-note: palladium continues to power ahead, having made all-time highs consistently in recent months to challenge $900 this week.

It's Settled: Central Banks Trade S&P 500 Futures

Based on the unprecedented collapse in trading volumes of cash products over the past 6 years, one thing has become clear: retail, and increasingly, institutional investors and traders are gone, probably for ever and certainly until the Fed's market-distorting central planning ends. However, one entity appears to have taken the place of conventional equity traders: central banks.

Courtesy of an observation by Nanex's Eric Hunsader, we now know, with certainty and beyond merely speculation by tinfoil fringe blogs, that central banks around the world trade (and by "trade" we meanbuy) S&P 500 futures such as the E-mini, in both futures and option form, as well as full size, and micro versions, in addition to the well-known central bank trading in Interest Rates, TSY and FX products.

In fact, central banks are such active traders, that the CME Globex has its own "Central Bank Incentive Program", designed to "incentivize" central banks to provide market liquidity, i.e., limit orders, by paying them (!) tiny rebates on every trade. Because central banks can't just print whatever money they need, apparently they need the CME to pay them to trade.

So the next time you sell some E-minis, ask yourself: is the ECB on the other side? Or the BOE? Or, perhaps, you are selling S&P 500 futures to Kuroda. Who knows: there is no paper trail anywhere, although a FOIA request and/or the discovery from a lawsuit, class action or otherwise, of the CME's central bank incentive program would likely yield some stunning results.

But the only place where "discovery" would be by far the most interesting, is for the CME to disclose just which central banks provide, or take such as at 8am every morning when one market sell order takes out the entire bid staack, the most liquidity when it comes to central bank trades in "Metals Futures Contracts (Physicals)."

Because imagine the shock and awe if and when it is uncovered that the biggest active manipulators of gold are not some junior-level traders out of Britain's criminal bank cartel, but the central banks themselves.

Finally, while the list above deals with international central banks "providing" ES liquidity, those wondering why the NY Fed is not on the list and just how the Fed's active trading team participates in the market without breaking the law, we have just one word: Citadel.

Source: Modifications to Central Bank Incentive Program. CME/CBOT/NYMEX/COMEX #14-038

JPMorgan Warns Military Escalation In Ukraine "May Lead To A Lehman-Style Shock"

The sudden military escalation in Ukraine in recent days has, according to JPMorgan's Alex Kantarovich, reduced the earlier hopes that the high level meeting in Minsk on 26 August would help to defuse the conflict. As Kantarovich warns, the markets are now bracing for the US/EU responses. In the worst case scenario, now appearing more likely, severe pressure on stocks may extend. As he concludes, "we believe that with the significant deterioration in the Ukrainian situation, markets may treat this as a Lehman-style shock."

Via JPMorgan Cazenove,

Lehman moment. We believe that with the significant deterioration in the Ukrainian situation, markets may treat this as a Lehman-style shock. We note there are substantial fundamental differences between the current situation and the 2008/09 crisis; the oil price is now holding up relatively well and the economic contraction may not be that deep. On the other hand, for traded stocks, the challenges and risks to investability presented by sanctions could be practically open-ended. We demonstrate that revisiting the post-Lehman lows would imply downside of 50% from an index perspective, and ~40% from the forward P/E perspective (Fig. 1 and 2).

Poor visibility. With several false dawns since the start of the conflict, the markets may no longer assume a quick and easy resolution of the conflict and ‘worse before better’ seems a likely sequence to us; we thus recommend reducing exposure to Russia and differentiating carefully among the sectors and names.

Exposure and defenses. We see Financials as particularly badly exposed - both from the sanctions perspective and from the macro perspective. We also highlight the acute pressure on economically sensitive consumers, exposed to the escalating trade wars. We again stress that the best defensive trade comprises exporters with no unwanted political affiliations as these also benefit fundamentally from the weaker ruble. The sell-off on 28 August provides a good illustration of the phenomenon (Fig. 3 and 4).

*  *  *
So Buy US Stocks... because nothing says 'global growth' like a contagious collapse in a major nations markets...

A Map Of The Military Flashpoints In Ukraine

http://mediarnbo.org/

Palladium price sets fresh 13-year high

Platinum futures listed on Nymex were once again trending lower at $1,423.70 an ounce on Friday, but September palladium contracts jumped more than 1% to a high of $909.20 an ounce as an escalation of the conflict in Ukraine saw supply fears resurface.

Palladium futures trading on New York's Nymex are now at the highest since February 2001 as news of Russian troops entering the east of the country raises concerns that the West will be forced to tighten sanctions against the number one supplier of the precious metal.

The US and EU have already imposed restrictions on Russian imports of oil technology and have placed curbs on its defence and banking sectors, but so far supply of platinum and palladium have been mostly unaffected.

PGMs are mainly used to clean emissions in automobiles and Europe's car industry is the number one customer of PGMs. Not everyone believes the tensions would affect the fundamentals of the industry.

"In a nutshell, Russia needs the money, the EU needs the metal; it all boils down to politics, but the base case is business as usual," GFMS analyst Johann Wiebe told the Reuters Global Gold Forum on Friday.

South Africa, where a devastating strike kept mined metal off markets for months, and Russia combined account for close to 80% of global supply of palladium and 70% of platinum output.

Russia needs the money, the EU needs the metal

Russia has been stockpiling palladium since Soviet times, but those inventories are now believed to have been largely depleted.

South Africa is the top supplier of platinum but with production slowly returning to pre-strike levels and without the Russian risk premium platinum prices have come under pressure.

While palladium is up 26% this year, platinum has only managed gains of 3.5% in 2014. After a brief period above $1,500 in early July, platinum has also declined 6%.

Expected demand has not materialized either. From expectations of a 6% jump in sales this year, the continent's carmakers only managed to shift around 3% more vehicles in the first half as Europe's largest economies look in danger of sliding back into recession.

A slowing economy in China, the world's largest vehicle market where catalyst use skews towards palladium, is also clouding the outlook.

MCX-Natural gas is showing sign of a reversal

The natural gas futures traded on the Multi Commodity Exchange has risen by about 4 per cent in the past week. The price action over the last one month is suggesting the formation of a double bottom reversal pattern. The key resistance level to watch now will be ₹247 per mmBtu.

A strong break and close above this level will confirm a reversal. The outlook will then turn bullish for the target of ₹257. In such a scenario traders can go long at ₹249 with a stop-loss at ₹246 for the target of ₹255.

On the other hand, inability to breach ₹247 can reverse the contract lower for the targets of ₹240 and ₹235. The outlook will turn bearish if the contract records a strong close below ₹229. The ensuing target on such a break will be ₹220.

MCX-Crude oil: The MCX-crude oil futures contract is stuck in a narrow range of ₹5,650 and ₹5,755 a barrel in the past week. The immediate outlook is not clear. A breakout on either side of this range will decide the next leg of move for the contract. A strong break above ₹5,755 can take the contract higher to ₹5,900 – the 21-day moving average.

On the other hand, decline below ₹5,650 can drag the contract lower to ₹5,500. Traders can stay out of the market for now and wait for a break out to get clear trade signals.

Nickel price rally to continue into 2015: Goldman Sachs

The latest research report published by Goldman Sachs-the American multinational investment banking firm predicts the price rally in Nickel to continue into 2015. The surplus in the global refined nickel market has narrowed in 2014, when compared with the previous year.

The report states that the rise in LME Nickel inventories is the result of shift in stocks from Australian stockpile and Chinese bonded warehouses. The move from Australian stockpiles was witnessed since early-2013. However, the inspections at Chinese Qingdao port have resulted in movement of stockpiles to LME warehouses since Q2 this year.

The shifting of stocks accounted for over 75% of the total rise in LME stocks. The research indicates that almost 50,000 mt out of the LME stock rise of 66,000 mt in 2014 is due to stock shifts. Since beginning of 2013, the LME stockpiles have increased by 180,000 mt. Out of which, nearly 80,000 mt is due to the shift of stocks from Australia and China.

The ban ore Nickel ore exports by Indonesian administration have led to a strong rally in Nickel prices during the year. The prices have surged nearly 35% year-to-date. The ongoing Indonesian ban may deplete the high grade ore stocks in Chinese warehouses. This will act as the major trigger for the next leg of up move in Nickel prices. The turnaround is expected to happen towards end-2014 of early Q1 2015.

The prices have currently stabilized in the range of $18,000 to $19,000 per mt. The investment banking firm predicts the Nickel prices to rise to $22,000 per mt in 2015.