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Italy is heading for the exit. While it might seem fanciful for one of the founding members to consider leaving the euro, there is a growing sense that no more than a couple of years from now, Rome will once again be administering its own currency.
Figures last week revealed a country in deep crisis. With GDP still almost 10% smaller than before the financial crisis, it is stuck in a deep depression.
All efforts to revive the economy have failed, such is the sclerotic nature of its tax rules, business markets and labour laws. Combined, they have prevented progress to a more effective economy unencumbered by traditional subsidies and benefits.
Meanwhile, Spain and Ireland have contrived to push through reforms, bolster their banks, and move ahead. Even Greece’s economy is growing, according to the most recent official figures.
There was a time when Italy’s middle-income earners would dismiss talk of a euro exit. Their savings were held in euros and all their other assets, especially their property, enjoyed a secure value in the common currency. To leave the euro would be to court a huge drop in wealth.
That fear appears to be evaporating. Beppe Grillo’s Five Star Movement has moved its position to one of outright opposition to the euro. The comedian-turned-politician is promoting a petition to pull out. More broadly, promise after broken promise of growth has undermined support for Brussels and the European Central Bank.
Italians have waited three years for ECB boss Mario Draghi to copy the money-printing exercises at the Bank of England and US Federal Reserve. Draghi talks endlessly of pumping funds into the eurozone’s ailing economies, only to pull back. Last week he was at it again.
But even when a Draghi boost comes, it is unlikely to be effective. Italians know themselves. They need a currency devaluation. It is the only saviour. The Japanese have done it. And as the other major country funding a massive public sector debt, it looks like a good role model.
Make no mistake, a return to the lira will be painful. Yet it looks like something voters are willing to contemplate to stop the economy forever sliding backwards.
Author: Elite Forex Blog - Market Research & Analysis
Posted: November 16, 2014, 2:58 pm
With Apple at record highs, its market capitalization is now bigger than Russia's entire stock market (the 20th largest market in the world). What's more,as Bloomberg notes, there would be enough money left over after selling Apple and buying Russia to purchase over 190 million contract-free 64Gb iPhone6 Pluses (enough for every Russian).


If you owned Apple Inc., and sold it, you could purchase the entire stock market of Russia, and still have enough change to buy every Russian an iPhone 6 Plus.

...

Russia, the 20th largest among the world’s major markets, is not the only one Apple has surpassed. The company, which forecasts a record holiday-sales quarter and has $155 billion in cash, is also bigger than 17th-ranked Singapore and 18th-ranked Italy.
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http://www.zerohedge.com/news/2014-11-14/apple-now-worth-more-entire-russian-stock-market 
Author: Elite Forex Blog - Market Research & Analysis
Posted: November 14, 2014, 11:06 pm
Just as China is buying 'cheap' oil with both hands and feet, so Russia, according to the latest data from The World Gold Council (WGC) has been buying gold in huge size. Dwarfing the rest of the world's buying in Q3, Russia added a stunning 55 tonnes ...
Author: Elite Forex Blog - Market Research & Analysis
Posted: November 13, 2014, 9:48 pm
As US QE has come to an end, depriving the world of US$1 trillion printed dollars a year, SocGen's Andrew Lapthorne warns, there are stillplenty of things for investors to be concerned about. Indeed with asset prices where they are, investment ret...
Author: Elite Forex Blog - Market Research & Analysis
Posted: November 13, 2014, 4:29 pm
This past week Brazil announced that it will be building a 3,500-mile fiber-optic cable to Portugal in order to avoid the grip of the NSA.
What’s more, they announced that not a penny of the $185 million expected to be spent on the project will go to American firms, simply because they don’t want to take any chances that the US government will tap the system.
It’s incredible how far now individuals, corporations, and even governments are willing to go to protect themselves from the government of the Land of the Free.
The German government, especially upset by the discovery of US spying within its borders, has come up with a range of unique methods to block out prying ears.
They have even gone so far as to play classical music loudly over official meetings so as to obfuscate the conversation for any outside listeners.
They’ve also seriously contemplated the idea of returning back to typewriters to eliminate the possibilities of computer surveillance.
More practically, the government of Brazil has banned the use of Microsoft technologies in all government offices, something that was also done in China earlier this year.
The Red, White, and Blue Scare has now replaced the Red Scare of the Cold War era. And it comes at serious cost.
From Brazil’s rejection of American IT products alone, it is estimated that American firms will lose out on over $35 billion in revenue over the next two years.
Thus, as the foundation of the country’s moral high-ground begins to falter, so does its economic strength.
The irony should not be lost on anyone; on a day when Americans celebrate their veterans’ courage in fighting against the forces of tyranny in the world, we find yet another example of where the rest of the world sees the source of tyranny today.
It’s amazing how much things have changed.
In the past, the world trusted America with so much responsibility.
The US dollar was the world’s reserve currency. The US banking system formed the foundation of the global banking system. US technology became the backbone of the global Internet.
But the US government has been abusing this trust for decades.
Today the rest of the world realizes they no longer need to rely on the US as they once did.
And in light of so much abuse and mistrust, they’re eagerly creating their own solutions.
Just imagine—if Brazil is building its own fiber optic cable to avoid the NSA, it stands to reason that they would create their own alternatives in the financial system to directly compete with the IMF and the US dollar.
Oh wait, they’re already doing that too. Fool me twice, shame on me.
Author: Elite Forex Blog - Market Research & Analysis
Posted: November 13, 2014, 4:24 pm
As the West (US and its pressured allies) attempt to 'isolate' Russia more and more, the inevitable cornering further and further incentivizes Putin to develop alternatives to the status quo. In the past, western sanctioners have sabre-rattled cutting off Russian from SWIFT - the international inter-bank payment system - as a next step in squeezing the oligarchs into submission (though 'independent' SWIFT distanced itself from those calls). Now however, as RT reportsRussia intends to have its own international inter-bank system up and running by May 2015. The Central of Russia says it needs to speed up preparations for its version of SWIFT in case of possible ”challenges” from the West. If successful, this would pose a further challenge to the USD's reign as sanction blowback reverberates once again.

Russia intends to have its own international inter-bank system up and running by May 2015. The Central of Russia says it needs to speed up preparations for its version of SWIFT in case of possible ”challenges” from the West.

"Given the challenges, Bank of Russia is creating its own system for transmitting financial messaging... It’s time to hurry up, so in the next few months we will have certain work done. The entire project for transmitting financial messages will be completed in May 2015," said Ramilya Kanafina, deputy head of the national payment system department at the Central Bank of Russia (CBR).

Calls not to use the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system in Russian banks began to grow as relations between Russia and the West deteriorated over sanctions. So far, SWIFT says despite pressure from some Western countries to join the anti-Russian sanctions, it has no intention of doing so.

Ramilya Kanafina says the system will meet all the market requirements due to its security. A center for processing messages in SWIFT format is in the process of development. It is expected that all messaging options will be operating by December 2014, she added.

The National Payments Council, a non-profit partnership comprising members of the Russian national payment system, proposed establishing a Russian version of SWIFT 100 percent owned by Bank of Russia in September.

SWIFT, is currently one of Russia’s main connections to the international banking system, and if turned off, could hurt the Russian economy, in the short-term. Globally it transmits orders for transactions worth more than $6 trillion, and involves more than 10,000 financial institutions in 210 countries. According to SWIFT’s statute, the system has national groups of members and users in each country. In Russia it’s ROSSWIFT - the second biggest worldwide SWIFT association after the US.

http://www.zerohedge.com/news/2014-11-12/russia-have-swift-alternative-may 
Author: Elite Forex Blog - Market Research & Analysis
Posted: November 12, 2014, 10:27 pm
The UK’s Financial Conduct Authority (FCA) and the US Commodity Futures Trading Commission (CFTC), in a concerted action have imposed fines totalling $3.1bn on five banks for failing to control business practices in their G10 spot foreign exchange (FX) trading operations.Citibank, fined £225,575,000 ($358m), HSBC Bank Plc £216,363,000 ($343m), JPMorgan Chase Bank £222,166,000 ($352m), The Royal Bank of Scotland Plc £217,000,000 ($344m) and UBS AG £233,814,000 ($371m) by the FCA are in the spotlight as “failings at these banks undermine confidence in the UK financial system and put its integrity at risk,” charges the regulator. In the United States, the orders from the CFTC collectively impose over $1.4bn in civil monetary penalties, specifically: $310m each for Citibank and JPMorgan, $290m each for RBS and UBS, and $275m for HSBC.
The fines follow a year-long investigation by the FCA into claims that the foreign exchange market - in which banks and other financial firms buy and sell currencies between one another, was being rigged. In April this year the FCA said it was particularly looking into the way that firms reduce the risk of traders manipulating benchmarks; ensure confidentiality and control conflicts of interest. It also reviewed compliance with new regulations on the London Interbank Offer Rate (Libor), which were introduced in April 2013 following a number of enforcement actions for attempted manipulation of the benchmark.
The FCA found that between January 1st 2008 and October 15th 2013, ineffective controls at the banks allowed G10 spot FX traders to put their banks’ interests ahead of their clients, “other market participants and the wider UK financial system. The banks failed to manage obvious risks around confidentiality, conflicts of interest and trading conduct. These failings allowed traders at those banks to behave unacceptably. They shared information about clients’ activities which they had been trusted to keep confidential and attempted to manipulate G10 spot FX currency rates, including in collusion with traders at other firms, in a way that could disadvantage those clients and the market”.
- See more at: http://www.ftseglobalmarkets.com/news/regulators-fine-banks-$31bn-for-fx-rates-manipulation.html#sthash.ERGYGCRH.dpuf

Regulators fine banks $3.1bn+ for FX rates manipulation - See more at: http://www.ftseglobalmarkets.com/news/regulators-fine-banks-$31bn-for-fx-rates-manipulation.html#sthash.ERGYGCRH.dpuf
Author: Elite Forex Blog - Market Research & Analysis
Posted: November 12, 2014, 4:07 pm
"They are building stuff that nobody really wants or needs... and there will be a day of reckoning" sums up yet another mega ghost city project under development in China. As NBC News reports, China's $50-billion knock-off of the Big Apple - near the port city of Tianjin, some 120 miles from Beijing - complete with its own Rockefeller Center and Twin Towers has been billed as the world's largest financial center in the making. But this Manhattan still has a long way to go...

China's $50-billion knock-off of the Big Apple sits on a river bend — much like its namesake — near the port city of Tianjin, some 120 miles from Beijing. Complete with its own Rockefeller Center and Twin Towers, it's been billed as the world's largest financial center in the making. But this Manhattan still has a long way to go.

A recent visit shows that construction that began in 2008 on the back of a massive credit boom unleashed in China after the global financial crisis appears to have ground to a halt. While the stunted version of “Rockefeller Center” and its Twin Towers appeared to be complete — both were empty and fenced off.

"It’s the financial crisis. The impact is big," said one man on the site who preferred not to be identified but said he worked for a transportation company. "I think there are still working on a building over there," he added, pointing down a wide and empty highway, strewn with litter.

...

It was scheduled for completion in 2019, offering 164 million square feet of office space over an area larger than Manhattan's financial district in a bid to stimulate development of vast residential districts nearby.

"They are building stuff that nobody really wants or needs — and there will come a day of reckoning," explained Gillem Tulloch, a Hong Kong-based analyst and managing director of GMT Research who has studied the growth of China's "ghost cities" across the country.

...

"Our leading economists in the West were lauding the Soviet-style system from the 1950s up until the 1980s," he said. "They were all wrong. I think it’s the same with China."
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Author: Elite Forex Blog - Market Research & Analysis
Posted: November 12, 2014, 4:00 pm
A funny thing happened on the way to the ‘end’ of the multi-trillion dollar bond buying program known as QE - the Fed chronicles. Aside from the shift to a globalization of QE via the European Central Bank (ECB) and Bank of Japan (BOJ) as I wrote about earlier, what lingers in the air of “post-taper” time is an absence of absence. For QE is not over. Instead, in the United States, the process has simply morphed from being predominantly executed by the Federal Reserve (Fed) to being executed by its major private bank members. Fed Chair, Janet Yellen, has failed to point this out in any of her speeches about the labor force, inflation, or inequality. 
The financial system has failed and remains a threat to us all. Only cheap money and the artificial inflation of asset values can make it appear temporarily healthy. Yet, the Fed (and the Obama Administration) continue to perpetuate the illusion that making the cost of (printed) money zero by any means has had a positive effect on the population at large, when in fact, all that has occurred is a pass-the-debt-ponzi-scheme co-engineered by the Fed and big US bank beneficiaries. That debt, caught in the crossfires of this central-private bank arrangement, is still doing nothingfor American citizens or the broader national or global economy. 
The Fed is already the largest hedge fund in the world, with a book of $4.5 trillion of assets. These will plummet in value if rates rise.  Cue the banks that are gearing up their own (still small in comparison, but give them time) role in this big bamboozle. By doing so, they too are amassing additional risk with respect to interest rates rising, on top of all their other risk that counts on leveraging cheap money.
Only the super naïve could possibly believe that the Fed and its key banks haven’t been in regular communication about this US Treasury security shell game.  Yet, aside from a few politicians, such as former Congressman Ron Paul, Congressman Sherrod Brown and Senators Bernie Sanders and Elizabeth Warren, the notion that Fed policy has helped bankers, rather than other people, remains largely divorced from bi-partisan political discussion. 
Adding more fuel to the central-private bank collusion fire, is the fact that the Fed is a paying client of the JPM Chase. The banking behemoth is bagging fees for holding and executing transactions on the $1.7 trillion New York Fed’s QE mortgage portfolio, as brilliantly exposed by Pam Martens and Russ Martens.
Wouldn’t it be convenient if JPM Chase was also trading this massive mortgage book for its own profits? Or rather - why wouldn’t they be?  Who’s going to stop them – the Fed? Besides, they hold more trading assets than any other US bank, so why not trade the Fed’s securities ostensibly purchased to help the public - recover?
According to call report data compiled by the extremely thorough website www.BankRegData.com, nearly 97% of all bank trading assets (including US Treasuries) are held by just 10 banks, led by JPM Chase with 43.80% and followed by Citigroup at 24.51% of all bank trading assets.
Last quarter, US Treasuries were the fastest growing form of security bought by banks, increasing by 26.3% or $72 billion over the prior quarter. As the Fed tapered, banks stepped in to do their part in the coordinated Fed-private bank QE game. In the past year, banks have added $185.8 billion of US Treasuries to their books, more than doubling their share of government debt.
Just seven banks comprised nearly all ($70.5 billion) of this quarterly increase: State Street Bank, Capital One, JPM Chase, Wells Fargo, Bank of America, Bank of NY Mellon and Citigroup. By the end of the third quarter of 2014, Citigroup, with $95 billion, was the largest holder of US Treasuries, followed by Bank of America at $54.8 billion and Wells Fargo at $37.8 billion from nearly zero at the start of 2014. Bank of NY Mellon holds $25.3 billion and JPM Chase holds $15 billion US Treasuries.
This increase in US Treasury holdings reflects another easy money element of our federally subsidized banking system. Banks take deposits from individuals for which they pay close to zero in interest, in fact, charge customers fees for keeping their money  (courtesy of the Fed’s Zero-Interest-Rate policy.) They can turn that around to make a cool risk-free 2.3% by parking the money in 10-year US Treasuries. Why lend to Joe the Plumber, when the US government is providing such a great deal?
But, the recent timing here is key. Banks only started buying US Treasuries in earnest when the Fed announced its tapering plans. Thus, not only are they participants in the ZIRP game as recipients of cheap money, they are complicit in effecting monetary policy. As the data analyzed so expertly by Bill Moreland at www.BankRegData.com makes clear, there has been no taper.  Thus, the publicized reason for tapering – better job and economic growth – is also bogus.
During the third quarter, Wells Fargo and Bank of America matched Fed purchases of US Treasuries, keeping the total amount of US Treasuries in QE land neutral. With such orchestration to keep rates down and the prices of US Treasury securities up, all the talk about whether the labor force is strengthening or inflation exists or not is mere show. Banks haven’t even propped up the labor market in their own industry. They chopped 11,400 jobs last quarter. In the past two years, they cut 57,236 jobs.  
No one in either political party mentioned any of this during the mid-term elections. Yet, our political-financial system has gone from the dysfunctional to the failed to the surreal. Speculation, once left to individuals and investors, is now federally sponsored, subsidized and institutionalized.  When this sham finally buckles and the next shoe falls and rates do eventually rise, the stock market will tank, liquidity will die, and the broader economy will plunge into a worse Depression than before. We are not there yet because of these coordinated moves and the political force behind them. But we are on a precarious path to that inevitability. 

http://www.zerohedge.com/news/2014-11-11/former-goldman-banker-reveals-path-next-depression-and-stock-market-collapse
Author: Elite Forex Blog - Market Research & Analysis
Posted: November 11, 2014, 9:15 pm
For the week ahead, BofAML's MacNeil Curry is focused on the plight of the USDollar, US Treasuries, and commodities; especially gold and oil. All of these markets, he warns, are showing signs of changes in trend. Most notably, Curry explains, we are&nb...
Author: Elite Forex Blog - Market Research & Analysis
Posted: November 10, 2014, 11:43 pm