On QE99, Gold, & Global Growth Concerns - The Chart That Explains Marc Faber's Fears

While The IMF recognizes the gaping chasm between collapsing global growth expectations and market exuberance, they remain confident that US growth will save the world. This, Marc Faber explains to a wise Bloomberg TV panel, is why stocks around the world (and now in the US) are starting to weaken, "the recognition that global growth is not accelerating," as the narrative would like us all to believe, "but is slowing." Central Bank money-printing has enabled deficit-heavy fiscal policy and, Faber simplifies, "the larger the government, the less growth there will be from a less dynamic economy." Policy-makers have only one tool - money-printing, and QE99 is coming.

In true Keynesian hockey-stick style, each time a current year's growth expectations slide, the following year's expectations are ratcheted higher... and if stocks weaken into that 'ratcheting' then the central banks unleash more QE... As the following chart shows, the gap between the 'efficient' market and fundamental reality has never been wider and  - as Faber implies - policy makers simply cannot allow that gap to be filled (and all that created wealth to once again evaporate)... with QE4EVA coming to an end,the market is forcing "someone"'s invisible hand to act - demanding moar money-printing or the Keynesians will once again be proved entirely wrong.

With all that hot money having flooded into stocks, art, and real estate; this week's record high inflows into bonds suggest commission-takers' worst nightmare "great rotation" is about to happen... or The Fed, ECB, BoJ, PBOC will re-open the spigots and print (defending their actions on the back of global growth slowing - a new mandate it would appear) - and up goes gold.

Marc Faber discusses global growth, gold, money printing, China, and inflation in this interview...

Norilsk sinks as nickel demand slumps

The American cache receipts of the world’s largest nickel producers stepped down to 1.6 percent, on Wednesday to 17.23 dollars, due to the decline in the price of nickel, which is the most important metal in the process of treating steel for its production. 20 percent of the stock of the company has been lost, since the month of July, first time after lowest in five months, which made the decline stand apart as one of the benchmarks of Micex Index when it tumbled down followed by the annexation by the President Valdimer, regarding Crimea in  the month of March.

Last month, during the slowdown in the Chinese economy, nickel was forced to0 enter a bear market. As China is the biggest consumer of nickel, the stockpiles raised to a record. On October 7th, the International Monetary Fund, had to cut off their forecast, as the decline in demand is expected to grow further. After being inspired by Russia’s role in the war of Ukraine, Norilsk encouraged the sell-off in the Russian equities, which is promoting 46 percent, which is almost near to a three year high after months of shortage in the nickel supply.

No Big Turnround Expected in Aluminum Market.

The longs are not advised to enter the aluminum market, as no big turnround is expected to happen in the aluminum market during October, one CIFCO analyst told SMM in a recent interview. 

“The policy-front action and demand conditions will determine October’s aluminum market”, the analyst said. 

A moderate development of global automobile market will allow for a relatively balanced aluminum market in China as long as the resumption in domestic aluminum industry is at a slow pace, the analyst added.   

Will Zinc Price Rally in October?

Zinc price in China’s domestic market is expected to trend higher in October, an analyst from Shanghai CIFCO Futures predicts in a most recent SMM’s interview. 

Orders at Chinese galvanizers and zinc oxide producers usually grow in Q4, and this will boost demand for zinc ingot, the analyst told SMM. 

“Physical supply is tight now, with spot premiums in east China’s zinc market as high as 200 yuan per tonne”, he said.  

Concern over supply disruptions of zinc ore will continue to lure investors into zinc market, he added. 

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China’s zinc exports reached a –year high in August, and most exports went to LME-registered warehouses, Shanghai Metals Market learns.
  

China exported 21,200 tonnes of refined zinc in August, up 28-fold YoY, bringing net imports only 37,000 tonnes, according to China Customs.

  

Growing pressures in bonded-zone inventories, Qingdao’s financing fraud, high storage charges and cash flow problems all promoted export activities since June, especially in bonded zones, SMM understands.

BNP Paribas sees Copper to avg $6,500 a ton in 2015; Aluminum to avg $2,060

Copper is expected to average $6,500 a ton during next year while aluminum to average $2,060 a ton, said BNP Paribas.

 

Except for copper , all of these forecasts are above current prices for three-month metal on the London Metal Exchange. 

 

The French bank’s 2015 average price forecasts for the other base metals are lead at $2,365 a ton; nickel at $22,100a ton; tin at $24,000 a ton and zinc at $2,560 a ton. 

 

Mounting supply constraints and respectable demand growth should provide increasing support for most base metals in 2015.

 

“The constraints remain greatest among the smaller metals. In particular, the bank says, supply constraints in lead, tin and zinc will become more pressing in 2015,” BNP Paribas added.

 

Nickel’s outlook remains entirely in the hands of Indonesian policy and still looks positive as things stand, BNP Paribas said, referring to a ban on ore exports. 

 

Aluminum continues to face a large structural surplus, but non-Chinese producers are addressing this and China could start to experience raw material shortages. 

 

In contrast, BNP Paribas still expects firm supply growth to keep the copper price under pressure until deep into 2015.

 

BNP Paribas maintains its recommendation of a short copper trade versus a basket of other base metals.

Crude Enters Bear Market As Gold Posts Longest Winning Streak In 7 Months

WTI Crude oil has now entered a bear market, down over 20% from its June highs (and energy stocks are not off the lows) edging closer and closer to 28 month lows. Meanwhile, gold prices have risen for 4 days in a row - the longest winning streak in 7 months...

Oil in a bear market...

With Brent-WTI back at 3-year lows..

And gold is up 4 dasys in a row - the last time it did this was February and it continued to rise to 2014 highs...

Schizo Market Has Biggest Plunge In 6 Months Following Most Euphoric Surge Since 2011

Yesterday's panic buying vertical ramp in stocks - decoupling from everything but the trusty partners VIX and AUDJPY - has been entirely unwound as The Dow drops over 300 points (nearly unchanged for 2014), Trannies tumble and Small Caps slump. Stocks all closed significantly lower - despite a late-day effort to lift - ending the day down from pre-FOMC Minutes. Treasuries closed 0-2bps higher in yield but had ignored equity exuberance and provided the reality check by the close. Real trading volatility ranges are surging in the major indices which historically has not been a good sign. The USD retarced some of the FOMC losses as Draghi chatter pushed EUR higher. Oil prices cratered under $85 as gold and silver rose (despite USD strength). Following yesterday's biggest intrday swing since Nov 2011, the Russell 2000 saw its worst day in 6 months.

Today was the 4th most active (in terms of quotes/trades) ever.

The last 2 days in US equity markets...

Even Bob Pisani knows by now that the European Close seems to create a trend-reversal moment intraday that few machines (and even fewer humans) are willing to fight. Whether this is remnants of short-term cycles found due to POMO or just a drop in liquidity is unclear; but what is clear, it happens, and all too regularly... except today. After a notably weak start to the day, the machines were just getting revved up for the 1130ET reversal to kick in and lift the market back to VWAP when a curious thing happened... "someone" canceled-and-replaced orders for 666 contracts 26 times in the 1130ET to 1200ET period... and selling accelerated lower, no reversal, to close at the lows on heavy volume.