PETER SCHIFF: LATEST FOMC MINUTES ACTUALLY SAY NOTHING ABOUT RATES INCREASE

According to Bloomberg, market players believe there is a 74% chance that the Fed will hike rates at its next week's meeting, as they refer to hawkish comments by the policy-makers, as well as the most recent FOMC minutes. The 74%, however, does not include Peter Schiff, the head of Euro Pacific Capital.

In an interview below he is sharing his view on how the Fed might proceed with raising borrowing costs and the talk largely repeats a series of earlier attacks against the central bank, which he has criticized for mismanaging monetary policy.

Schiff suggests that in the minutes from the FOMC October meeting, the committee only said that a majority of the members believe that the conditions may be right for hiking in December, but they are not sure, as it will depend on the data.

He supposes the 0.25% increase might come, but is still inclined to believe it won't happen, as there can be a market selloff, or jobs data may disappoint, or October jobs data may be revised down... But anyhow, if the officials were so confident the economy is robust, why would they reassure the hikes would be tiny and gradual?

As for the impact on the economy, Schiff believes that a 4% increase won't come soon. Moreover, long before the Fed gets to just 1%, the economy will be back in official recession or close enough to it, that the central bank will again have to stimulate...

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APPLE KEEPS BETTING ON ASIA: THE TECH BEHEMOTH PLANS TO LAUNCH APPLE PAY IN CHINA BY FEBRUARY

Apple Inc. is planning to launch its new Apple Pay electronic-payment service in China by early February, says the Wall Street Journal referring to people familiar with the matter. But the U.S. tech giant risks being eaten by local sharks.

Apple's stock was down 1.3% at $117.75 as of 7:59 pm EST on November 23.

The move will bring Apple to a vibrant but highly competitive market for digital money. The tech giant has struck deals recently with China’s big four state-run banks, the WSJ said. The agreements will allow potential Apple Pay users to connect the service to their local bank accounts.

The move could still face regulatory obstacles in China, where banking and e-commerce are monitored by a number of regulators. But the Cali-based behemoth still expects to start its service before China’s Spring Festival holiday on February 8.

It is also unclear how much Apple would charge for purchases carried out through Apple Pay. In the U.S., Apple gets 0.15% of all credit card transactions and 0.5 cents per debit transaction.

The people familiar with the matter said to the WSJ that the amount Apple would make off such transactions has been an impediment in negotiations.

Apple Pay works on the latest iPhone models - the iPhone 6 and iPhone 6S. It is based on near-field communication technology, which allows users to tap their devices on readers at store sales counters and complete purchases by scanning their fingerprints.

The most popular Apple product in China is iPhone. The company’s sales to greater China, which includes Hong Kong and Taiwan, rose 99% to $12.5 billion in the quarter ended September 26.

But obviously, Tim Cook thinks the Chinese will find his e-payment system as enchanting as his phones.

Local sharks

The biggest obstacle is not regulators, however. Apple Pay is trying to enter the market where electronic payments are blooming and which is also dominated by its rivals.

State-run China UnionPay Co. holds a monopoly on credit- and debit-card payment processing, effectively pushing aside MasterCard and Visa. In the private sector, electronic payments are dominated by Alipay, a service run by an affiliate of Alibaba Group Holding, and WeChat, a chat-and-services app run by Tencent Holdings.

Moreover, one of Apple's fiercest rivals Samsung, is set to launch its payment platform in the UK, China and Spain by the first half of 2016, while an imminent LG G Pay app will debut in December.

For comparison, Android Pay and Apple Pay are based on NFC-based technologies while Samsung Pay prefers its magnetic secure transmission (MST) technology. But LG G Pay hasn’t yet decided what it will use. LG, however, is likely to use a highly flexible technology for its payment platform, said Tech Times. The competition will only grow more intense, as polls show people still are reluctant to drop conventional payment methods.

According to a survey from Accenture, 67% of people use cash, 59% of people use debit cards and 50% use credit. Apple Pay usage? 8%. A September survey of 3,000 credit card users by Phoenix Marketing International shows 14% of credit card users adopting Apple Pay.

However, as Samantha Sharf from Forbes noted, it is impossible to ignore the 48 million people who bought iPhones – largely the 6 – in Q4. We can’t know precisely what convinced they to buy but the 1% bump in sales from Q3 presents an opportunity for Apple Pay. So, a success in China is quite likely.

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THE BANK OF CANADA IS READY TO NEGATIVE INTEREST RATES

Recently Stephen Poloz said that THE BANK OF CANADA IS READY TO NEGATIVE INTEREST RATES Canadian central bank expands its emergency kit to defend the economy against major shocks - it can use lower interest rates in the event of a crisis. But Governor stressed that it does not mean the bank is preparing to use any of these measures (although the collapse in the price of oil and other commodities). “We don’t need unconventional policies now, and we don’t expect to use them. However, it’s prudent to be prepared for every eventuality,” Governor Poloz said yesterday.

If the crisis begins, the Bank could implement unconventional monetary policy measures: for example, stimulating the economy through quantitative easing or moving its policy rate below zero. Furthermore, the Bank would use whatever combination of these measures it judged appropriate under the circumstances. “Regardless of the situation, the Bank will keep its primary focus on achieving the inflation target,” Governor Poloz said.

And all this is taking place just days before the Federal Reserve looks likely to raise its key interest rate next week for the first time since the Great Recession. Most of the world’s central banks, including Canada’s, have been cutting rates. A Fed hike will mark a major divergence in global interest rates that is already sending tremors through the world’s stock, bond, commodity and currency markets. Canadian dollar fell to 1.3623 against US dollar yesterday, but now USD/CAD trades near 1.359.

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OIL FUTURES FALL TO LOWEST LEVEL IN 7 YEARS

On Tuesday Brent futures crashed to $39.8 a barrel and WTI futures fell down to $36.6 a barrel - the weakest levels in seven years. Previous prices at nearly $108 a barrel in June 2014 has finally wiped out in 2015. The Dow dropped 117 points yesterday, with the energy sector its biggest drag. Oil settled at $37.65 a barrel on Monday, the lowest since February 2009.

These moves come after Friday's decision by OPEC not to cut oil output following a contentious six-hour meeting. The oil cartel essentially left production near record highs despite the oversupply problem.

"My head is spinning from the past few days of declines. Sentiment is horrible. It's very bearish," said Mike Wittner, global head of oil research at Societe Generale.

U.S. production remains near record-highs. Goldman Sachs recently predicted U.S. output will shrink by a modest 65,000 barrels per day in 2016 due to declining drilling rig counts.

Сheap oil is a huge problem for energy companies like Exxon Mobil, Halliburton and Chevron, all of which have suffered steep declines in profits and share prices.

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TURKISH LIRA, AIRLINE STOCKS DROP ON REPORTS TURKEY "DOWNED RUSSIAN JET" NEAR SYRIAN BORDER

Media reports that the Turkish military have shot down a Russian-made plane near the Syria border are weighing on the markets.

The Turkish lira has taken a hit, weakening to 2.87 lira to the US dollar, from 2.845.

USD/TRY is currently trading at 2.8663, up 0.61%.

Elsewhere, European markets turned red with German DAX losing 0.91% and France's CAC down 1.29%.

British FTSE 100 lost 0.85%. On FTSE 100, airline stocks have fallen with easyJet down 3.31% and IAG (British Airways’ parent company) down 3%. Ryanair lost 2.95% and Wizz Air was down 0.89%.

Turkey said its fighter jets have shot down a warplane near the Syrian border after it violated Turkey’s airspace. The country' military said in a statement the jet was warned 10 times in the space of five minutes over airspace violations before it was shot down by F-16 fighter jets.

Some officials said the plane was a Russian-made SU-24. Russia’s defence ministry said the downed fighter jet was Russian and did not violate Turkish airspace, the RIA news agency reported.

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GERMAN GDP, IFO REPORTS LIFT EURO

The shared currency was higher Tuesday after a number of economic reports from the euro zone.

EUR/USD was last seen at 1.0648, up 0.1%, while EUR/GBP jumped 0.22% to trade at 0.7038.

The Federal Statistics Office has just confirmed that Germany’s GDP rose by just 0.3% in the July-to-September quarter, matching analysts' expectations.

Exports rose by just 0.2% quarter-on-quarter, compared to estimates of a 0.4% rise. Imports, though, jumped by 1.1%.

And the resulting net trade deficit wiped 0.4% of Germany’s growth rate -- the weakest since 2013.

Europe’s powerhouse economy was left relying on domestic spending. Private consumption rose by 0.6% quarter-on-quarter, as German shoppers dipped into their wallets and purses. Government spending rose by 1.3% - the biggest increase since early 2009.

As an official at the Office explained, the refugee costs have played their role, and those are the first effects on state spending.

Higher imports may cheer critics who argue that Germany needs to spend more to help the euro zone economy rebound. But weaker exports highlight renewed weakness in developing markets.

Separately, the German research institute Ifo has reported that its Business Climate Index rose to a seasonally adjusted 109.0 this month from a reading of 108.2 in October, beating forecasts for 108.2.

The Current Assessment Index increased to 113.4 in November from 112.7 a month earlier and above expectations for 112.4. The Business Expectations Index, which measures attitudes related to business prospects over the next six months, rose to 104.7 this month from 103.9 in October, compared to expectatons for a reading of 104.0.

The monthly gauge is based on a survey of around 7,000 German firms in the manufacturing, construction, wholesale and retail sectors.

In France, business confidence rose less-than-expected in the last quarter. INSEE said in a report that French Business Confidence rose to an annual rate of 102, from 103 in the preceding quarter. Analysts had expected French Business Confidence to rise 103 in the last quarter.

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VOLKSWAGEN SEEMS TO MOVE TOWARDS SCANDAL SOLUTION

Volkswagen AG said it has been approved to repair about 70% of its rigged diesel engines and reached a deal with U.S. regulators to resubmit suspicious software in other vehicles for review.

Matthias Mueller, the company's head, told about 1,000 company executives Monday in Wolfsburg that German automotive regulator KBA has approved a software update for 2.0-liter diesel motors and agreed in principle to a plan for 1.6-liter engines.

The company's shared rose after the announcement, and currently traded up 2.49%.

Separately, the U.S. Environmental Protection Agency and California Air Resources Board agreed to allow the car producer to seek approval for a revised version of software in 85,000 diesel engines targeted in the latest probe by U.S. regulators, Volkswagen luxury-car division Audi said.

Assuming it’s approved, fixing it should cost around 50 million euros ($53 million).

Both agreements signal a step toward solutions in the scandal Volkswagen is facing on three fronts:

1) cheating software in nearly 11 million vehicles worldwide with 1.2-, 1.6- and 2.0-liter diesel engines;

2) irregular carbon-dioxide ratings on about 800,000 vehicles;

3) suspicious software in the larger diesel engines in the U.S.

Stuart Pearson, a London-based analyst with Exane BNP Paribas noted that since the simpler fix approved by the KBA applies throughout Europe, the recall may cost 10 billion euros instead of 16 billion euros.

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AUSSIE DROPS, KIWI HIGHER AFTER DATA

The Australian dollar fell on Thursday in Asia after downbeat capital spending data for private new capital.

The New Zealand dollar was supported after trade data.

AUD/USD traded at 0.7232, down 0.28%, while USD/JPY traded at 122.60, 0.12% lower.

In Australia, capital expenditure data for the third quarter with private new capital expenditure dropped 9.2%, compared to a 3.0% drop seen.

NZD/USD reversed the decline after data to trade at 0.6592, up 0.19%.

In New Zealand, the trade balance for October showed a deficit of NZ$963 million month-on-month and NZ$3.24 billion year-on-year, both slightly better than expected.

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ABN AMRO: GOLD WILL BE CHEAP AT LEAST UNTIL 3Q 2017

Analysts from ABN Amro report: “Gold investors will have to wait at least one more year before they can expect to see a sustained recovery of the gold market."

ABN Amro's forecast for 2016 says about further weakening of gold and silver at the beginning of 2016. According to them, the price will drop below $1,000 per ounce of gold and below $13,5 per ounce of silver.

Major factors of pressure on the gold market are the strengthening US dollar and tightening monetary policy of the Fed .

“We expect investors to continue to liquidate positions in the months ahead because of a higher US dollar and higher U.S. rates. It is likely that new lows in prices will be reached before the end of the first quarter of 2016. We expect the Fed to raise rates very slowly in 2016, but even this scenario is not priced into markets. A rise in U.S. Treasury yields should push gold prices towards USD 900 per ounce or even below.”

Despite the fact that analysts are negative on the gold for the coming year, they note that there is potential for short-term periods of growth.
"Gold prices may be supported in waves of risk aversion. However, when there is systemic risk in financial markets it will not behave as the ultimate safe haven asset. For example, at the height of the global liquidity crisis (when there was a shortage of liquidity) gold prices dropped sharply because investors valued cash more than gold," experts write.
Analysts do not expect gold and silver prices to recover before the third quarter of 2017.

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NOW YUAN IS IN THE ELITE CURRENCY CLUB, BUT EURO DOESN'T LIKE IT

The worst year for the euro can be even sadder: International Monetary Fund has included the Chinese yuan in the basket of reserve currencies. Now euro zone currency’s weighting in the IMF’s SDR basket will drop to 30.93 percent from 37.4 percent, the organization said yesterday. The yuan will join the dollar, euro, pound and yen in the SDR from Oct. 1, 2016. Its part will be approximately 10-11 percent.

This year the euro has tumbled 13 percent against the dollar yet, and central banks have reduced the proportion of the currency in their reserves to the lowest since 2002. European Central Bank President Mario Draghi signaled that they are open to boosting stimulus on the next ECB meeting.

“The euro will get the most impact from this weight adjustment,” said Douglas Borthwick, head of foreign exchange at Chapdelaine & Co. “The IMF is taking from euro to give to China; the other rebalancing amounts are largely negligible.”

Most likely, China’s yuan will exceed yen and sterling in the new IMF's basket. The levels will be 41.73 percent for the dollar, 8.33 percent for the yen and 8.09 percent for the pound, the IMF said.

It’s the first change in the SDR’s currency composition since 1999, when the euro replaced the Deutsche mark and French franc. The IMF reviews the basket every five years and rejected the yuan during the last review, in 2010.

The euro has dropped 5.3 percent this quarter against the dollar, it was at $1.0602 as of 13:15 GMT after reaching a seven-month low of $1.0558 on Monday.

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PETER SCHIFF & MIKE MALONEY ON THE UPCOMING MARKET CRASH - VIDEO (AND A NICE ONE)

Ben Bernanke and Alan Greenspan absolutely destroyed America - that's a view both great analysts share.

Peter Schiff, a famous Fed critic, and Mike Maloney, well-known author of the best selling precious metals investment book "Guide to Investing in Gold and Silver", published in 2008, met up in California to discuss some disturbing issues.

Schiff keeps wondering why the Fed persistently pretends it had nothing to do with the housing market bubble and the previous financial crisis. And he concludes that the central bank officials hardly see the coming crash.

Maloney supports his view, and in order to demonstrate it is correct, he shows a chart of Value of manufacturers' new orders for consumer goods industries from the Fed website. There was a plunge back in 2008, and the chart shows a similar fall is happening right now. Maybe the air is coming out of the bubble. But this graph, along with a number of others, suggests that the U.S. economy is sliding into recession.

The video dates back to June 2015, but it is still up to date, as the Fed has not dared to increase rates yet, and the global economy is still weakened. Peter Schiff argues they will keep talking and promising, but the Fed's December meeting is just two weeks away...

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COPPER SURGES 4% ON REPORTS FROM CHINA

Copper prices jumped on Thursday, along with other base metals such as nickel and zinc, after China regulators were said to consider a probe into metal short-selling in the local market.

Comex copper for March delivery rallied 2.67%, to trade at $2.104 a pound during morning hours in London. It earlier increased by as much as 3.93% to a session high of $2.133, the most since November 16.

Meanwhile, three-month copper on the London Metal Exchange spiked 2.73% to $4664.25 a metric ton.

Prices were boosted after reports that China's smelters have scheduled a meeting to consider taking action against falling prices.

Reuters reported earlier that the state-controlled metals industry institution, China Nonferrous Metals Industry Association, proposed on Monday that the government scoop up aluminum, nickel and minor metals including cobalt and indium, people with knowledge of the matter said. Although it is not clear if the authorities will agree to the proposal, the approach underlines the extent to which loss-making smelters in the world's top producer and consumer are suffering from low prices.

The proposal did not include copper, but it is likely to revive memories of 2009, Reuters says, when the State Reserve Bureau (SRB) in Beijing swooped in to purchase more than 700,000 tonnes of copper on the domestic and international markets.

On Thursday nickel futures jumped 2.1% while zinc added 3.74%.

Separately, gold struggled near six-year lows after U.S. economic data on Wednesday reinforced expectations for a Fed rate hike next month.

Comex gold for December delivery was last seen at $1,070.80 a troy ounce, up 0.07%, while Comex silver for December delivery rose 0.14% to trade at $14.175 an ounce.

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