Wednesday 13 April 2016

All News Is Good News Again.



Baltic Dry Index. 560 +05       Brent Crude 44.38

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

Brexit odds checker. http://www.oddschecker.com/politics/british-politics/eu-referendum/referendum-on-eu-membership-result

Brexit Quote of the Day.
Cameron: Why do you sit there looking like an envelope without any address on it?

With apologies to Mark Twain.

The Bear is dead! The Bull is back. And by bull, we really do mean bull. Ahead of the G-20 meeting, the IMF and World Bank Spring meetings in Washington, and most important of all, the OPEC and friends meeting in Doha on April 17, hopium surges again.  Below, the positive spin that oil has bottomed, China’s sorted, and stocks are set to ignore and overcome poor earnings. Buy everything!!!
There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

J. K. Galbraith.

Oil Surges to Four-Month High as Russians, Saudis Seen Agreeing

April 12, 2016 — 12:11 AM BST Updated on April 12, 2016 — 10:28 PM BST
Crude climbed to the highest level in more than four months as Saudi Arabia and Russia were seen agreeing on a potential production freeze.

Oil rose 4.5 percent in New York. Saudi Arabia and Russia have reached a consensus on an output freeze, Interfax said Tuesday, citing an unidentified “informed diplomatic source” in Doha. "There is hope" that an agreement can be reached regardless of Iran’s position, said Dmitry Peskov, the Kremlin’s press secretary. OPEC members will meet with other major producers, including Russia, to discuss capping production in the Qatari capital on April 17.

"The market has clearly shifted to the view that an agreement will be reached," said Mike Wittner, head of oil markets at Societe Generale SA in New York. "There are talks going on behind the scenes, and occasionally we get bits of information. People are going to trade on these bits of news."

Oil has rebounded after falling to the lowest level in more than 12 years amid signs a global glut will ease as U.S. output declines. Saudi Arabia, the biggest OPEC producer, said previously it would agree to a cap only if it’s joined by other suppliers including Iran, while Kuwait said a deal can be done without Tehran’s support. While Iran will attend the talks, it has ruled out limiting supply as it restores exports after sanctions were lifted in January.

West Texas Intermediate for May delivery rose $1.81 to settle at $42.17 a barrel on the New York Mercantile Exchange. It was the highest settlement price since Nov. 25. Total volume traded was 63 percent above the 100-day average at 4:40 p.m.
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World's Top Traders Say the Worst Is Over for Oil

April 12, 2016 — 1:43 PM BST Updated on April 12, 2016 — 3:02 PM BST
Top executives at the world’s largest oil-trading houses said the worst of the market’s woes are probably over, with some predicting prices will climb to $50 a barrel by next year.
“The down market is behind us,” Torbjorn Tornqvist, chief executive officer of Gunvor Group Ltd., said on Tuesday at the FT Global Commodities Summit in Lausanne. “It is the beginning of the end of that for sure.”
Oil has rebounded after falling to the lowest level in more than 12 years amid signs a global glut will ease as U.S. output declines. The world’s largest oil traders were meeting in Switzerland as members of OPEC and other major producers prepare to assemble in Doha on April 17 to discuss an output freeze. Oil traders benefited from a surge in volatility last year and that should continue, according to Tornqvist.


“We are going to have lots of volatility going forward,” Tornqvist said. “From here on the trend is up.”

A “rebalancing” of global crude oil supply and demand could take place by the end of the third quarter as production cuts by cash-strapped producers start to curb the current glut, according to Trafigura Group Pte CEO Jeremy Weir.

“I believe we’ve seen the bottom unless there is some sort of catastrophic situation, political or otherwise,” Weir said.

When oil prices recently dipped below $28 it was a positive for crude as forward prices fell faster than current ones, prompting major production projects to be canceled, according to Marco Dunand, CEO of Mercuria Energy Group Ltd.

 “We anticipate the market to start a recovery and we see a $50 price next year,” he said.

The oil market is at the beginning of a multiyear bull run, with prices rising to $60 later this year and $80 in 2017, said Pierre Andurand, the chief investment officer of London-based hedge fund Andurand Capital Management LLP.

---- The trading executives were unanimous in predictions that oil production from Iran will be slower than expected to return to the market after the lifting of sanctions in January.

Ian Taylor, CEO of Vitol Group of Cos., the world’s largest independent oil trader, said getting capital into Iran to fund the restart of production remains difficult. Trafigura’s Weir said banks are still “wary” of financing deals to trade oil from Iran as U.S. sanctions remain in place for now.
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Asian Stocks Surge With Iron Ore on China Trade; Yen, Bonds Drop

April 13, 2016 — 12:07 AM BST Updated on April 13, 2016 — 5:35 AM BST
Asian stocks climbed to a three-month high as Chinese trade data added to signs of a pickup in the world’s second-largest economy, supporting a rebound in commodities. Haven assets including the yen and sovereign bonds retreated.

Raw-materials producers and energy companies spearheaded a rally in the MSCI Asia Pacific Index, while futures on U.S. and U.K. benchmark share indexes rose. Copper and zinc led gains among industrial metals, while iron ore jumped by the daily limit in China. U.S. crude retreated by about 1 percent, after surging 13 percent in three days on prospects for an output freeze by leading producers. Malaysia’s ringgit gained against all 31 major counterparts and the Japanese yen was the worst performer.

Crude rebounded from a 13-year low over the past two months on optimism a global glut will end as leading producers including Russia and Saudi Arabia prepare to discuss capping output at an April 17 meeting in Doha. Speculation the oil market will soon find some enduring stability is helping to prop up equities, even as investors brace for what’s projected to be the worst U.S. earnings season since the global financial crisis. 
China’s exports jumped by the most in a year in March and declines in imports narrowed, adding to evidence of stabilization in the world’s second-biggest economy.

“Higher oil prices are triggering a retreat in risk-off moves,” said Masaaki Yamaguchi, a Tokyo-based equity market strategist at Nomura Holdings Inc., said by phone. “Strength in the yen is also easing, and the currency market is tilted toward a risk-on direction. Chinese trade data released today was weak as commodity prices had fallen, but it’s improved from January and February and concern over the Chinese economy is retreating. These are all acting as positive factors for the market.”
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To this old dinosaur, I have my doubts. For high risk investors, I would fade the coming OPEC gathering by putting on synthetic medium term double options. Talk is cheap, and most of those talking are mostly just talking up their book. Opec is notorious for cheating. Not enough US frackers have yet gone bust and higher prices will just bring back on-stream more US production that’s needed to service the frackers debt. In H2 16, Iranian oil will also increasingly impact the market.  As for China being sorted, a one month blip in exports is more likely to be seasonality, or even just noise in the figures, assuming that the figures are correct and not doctored.
But let’s play along with the hopium. Assuming higher oil prices lie ahead and that China’s fixed, and that falling earning can and will be ignored by the HFT algo machines, what then? Well higher oil prices and their downstream products will very quickly start altering global inflation statistics.  NIRP will return to ZIRP in a heartbeat, and ZIRP will turn into Normalised interest rates at a gallop. By 2017 a massive bond rout will be underway. Europe’s tottering banks will be back in crisis and collapse.

We end for the day with rising tension in Euroland. Germany’s Merkel is about to clash with the ECB’s Draghi at the coming meetings in Washington.

Mario Draghi’s Days Are Numbered—-Germany Takes Aim At The ECB Money Printing Spree

by Spiegel • 
There was a time when the German chancellor and the head of the European Central Bank had nice things to say about each other. Mario Draghi spoke of a “good working relationship,” while Angela Merkel noted “broad agreement.” Draghi, said Merkel, is extremely supportive “when it comes to European competitiveness.”

These days, though, meetings between the two most powerful politicians in the euro zone are often no different than their face-to-face at the most recent summit in Brussels. She observed that his forced policy of cheap money is endangering the business model of Germany’sSparkassen savings banks and retirement insurance companies. He snarled back that the sectors would simply have to adapt, just as the American financial sector has.

The alienation between Germany and the ECB has reached a new level. Back in deutsche mark times, Europeans often joked that the Germans “may not believe in God, but they believe in the Bundesbank,” as Germany’s central bank is called. Today, though, when it comes to relations between the ECB and the German population, people are more likely to speak of “parallel universes.”

ECB head Draghi doesn’t understand why he is getting so much resistance from the country that has profited from the euro more than any other. Yet Germans blame Draghi for miniscule yields on savings accounts and life/retirement insurance policies. Frustration is growing.

Draghi has pushed the prime rate down to zero and now even charges commercial banks a fee for parking their money at the ECB. He has also bought almost €2 trillion worth of bonds from euro-zone member states, making the ECB one of the largest state creditors of all time.

During his most recent appearance before the Frankfurt reporter pool, he went even further. The idea of pumping money directly into the economy, he said, was a “very interesting concept,” with a helicopter to distribute the money across the country if necessary, as economists have half-jokingly recommended. Doing so is seen as a way of boosting the economy. German money being thrown out of a helicopter: It would be difficult to find a more fitting image to show people that the money they have set aside for retirement may soon be worth very little.

Public Ruminations

The criticism of Draghi had already been significant, but his public ruminations about so-called “helicopter money” have magnified it to extreme levels. Even economists that tend to back the ECB, such as Peter Bofinger, who is one of Merkel’s economic advisors, are now accusing Draghi of constantly “pulling new rabbits out of the hat.” Leading representatives of the banking and insurance sectors are openly speaking of legal violations. And strategists within Merkel’s governing coalition, which pairs her conservatives with the center-left Social Democrats (SPD), are concerned that Draghi is handing the right-wing populist Alternative for Germany (AfD) yet another issue where they can score points with the voters. There is hardly any other issue that enrages Germans at town meetings and political party conventions as much as the disappearance of their savings due to the “unconventional measures” adopted by the ECB in Frankfurt.

By now, the growing dismay has been registered in the Chancellery. Merkel is also critical of Draghi’s zero percent interest policy, but she is afraid of making public demands that she may not be able to push through. Still, she is convinced that Draghi must give greater weight to German concerns, so she has resorted to telephone conversations and closed-door meetings to make her case.

Economics Minister Sigmar Gabriel, who is also head of the SPD and vice chancellor, has likewise refrained from publicly criticizing Draghi. Instead, he says it was the “inaction of European heads of government” that has transformed the ECB into “a kind of faux economic government.” But Draghi’s most recent decision to make money in the euro zone even cheaper has been heavily criticized within Gabriel’s Economics Ministry. 
“It jeopardizes the trust of all those who work hard to establish a small degree of prosperity or a nest-egg for retirement,” says one ministry official. “Plus, the cheap money hasn’t helped get the economy back on track.”

Most dangerous for Draghi, however, is the displeasure from the German Finance Ministry. A few weeks ago, Finance Minister Wolfgang Schäuble warned the ECB head that his ultra-loose monetary policies could “ultimately end in disaster.” The fact that Schäuble said anything at all is rather surprising, as were the words he chose. Out of respect for the ECB’s independence, finance ministers tend not to comment on decisions made by the central bank.
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“But it [the boom] could not last forever even if inflation and credit expansion were to go on endlessly. It would then encounter the barriers which prevent the boundless expansion of circulation credit. It would lead to the crack-up boom and the breakdown of the whole monetary system.”

Ludwig von Mises.

At the Comex silver depositories Tuesday final figures were: Registered 32.45 Moz, Eligible 122.14 Moz, Total 154.59 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, how Panama became a tax haven.

How a US president and JP Morgan made Panama: and turned it into a tax haven

In 1903 the US bullied Colombia into giving up the province that became Panama. The plan was to create a nation to serve the interests of Wall Street
Sunday 10 April 2016
This goes back a long way. The Panamanian state was originally created to function on behalf of the rich and self-seeking of this world – or rather their antecedents in America – when the 20th century was barely born.
Panama was created by the United States for purely selfish commercial reasons, right on that historical hinge between the imminent demise of Britain as the great global empire, and the rise of the new American imperium.

The writer Ken Silverstein put it with estimable simplicity in an article for Vice magazine two years ago: “In 1903, the administration of Theodore Roosevelt created the country after bullying Colombia into handing over what was then the province of Panama. Roosevelt acted at the behest of various banking groups, among them JP Morgan & Co, which was appointed as the country’s ‘fiscal agent’ in charge of managing $10m in aid that the US had rushed down to the new nation.”

The reason, of course, was to gain access to, and control of, the canal across the Panamanian isthmus that would open in 1914 to connect the world’s two great oceans, and the commerce that sailed them.

The Panamanian elite had learned early that their future lay more lucratively in accommodating the far-off rich than in being part of South America. Annuities paid by the Panama Railroad Company sent more into the Colombian exchequer than Panama ever got back from Bogotá, and it is likely that the province would have seceded anyway – had not a treaty been signed in September 1902 for the Americans to construct a canal under terms that, as the country’s leading historian in English, David Bushnell, writes, “accurately reflected the weak bargaining position of the Colombian negotiator”.

Colombia was, at the time, riven by what it calls the “thousand-day war” between its Liberal and Historical Conservative parties. Panama was one of the battlefields for the war’s later stages.

The canal treaty was closely followed by the “Panamanian revolution”, which was led by a French promoter of the canal and backed by what Bushnell calls “the evident complicity of the United States” – and was aided by the fact that the terms of the canal treaty forbade Colombian troops from landing to suppress it, lest they disturb the free transit of goods.

The Roosevelt/JP Morgan connection in the setting-up of the new state was a direct one. The Americans’ paperwork was done by a Republican party lawyer close to the administration, William Cromwell, who acted as legal counsel for JP Morgan.


JP Morgan led the American banks in gradually turning Panama into a financial centre – and a haven for tax evasion and money laundering – as well as a passage for shipping, with which these practices were at first entwined when Panama began to register foreign ships to carry fuel for the Standard Oil company in order for the corporation to avoid US tax liabilities.

On the slipstream of Standard Oil’s wheeze, Panama began to develop its labyrinthine system of tax-free incorporation – especially with regard to the shipping registry – with help and guidance from Wall Street, just as the US and Europe plunged into the Great Depression. The register, for example, welcomed US passenger ships happy to serve alcohol during prohibition.

In his seminal book on offshore jurisdictions, Treasure Islands, Nicholas Shaxson cites a letter from US treasury secretary Henry Morgenthau protesting to Theodore Roosevelt’s very different namesake, Franklin D Roosevelt, about “conditions so serious that immediate action is called for”. He complains about tax evaders resorting to “all sorts of devices” in places where “taxes are low and corporation laws lax”, citing Panama and the Bahamas.

Shaxson’s book then traces America’s shedding of any reticence to hide money: “While this offshore expansion accelerated, the erosion of America from the inside gathered pace.”

So, by the 1970s, when the US government had tightened its tax evasion loopholes, Panama went into the kind of full service we saw last week. Banking deposits soared, from small beginnings in 1970 to $50bn in 1980, according to the Tax Justice Network. And that was just the beginning, the small change.
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Brexit Quote of the week.

Cameron: He knows nothing and thinks he knows everything. That points clearly to a political career.

With apologies to George Bernard Shaw

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this new section. Updates as they get reported. Is converting sunlight to usable cheap AC or DC energy mankind’s future from the 21st century onwards? DC? A quantum computer next?

Scientists improve perovskite solar-cell absorbers by giving them a squeeze

Date: April 6, 2016

Source: Stanford University

Summary: Solar cells made of perovskites have shown great promise in recent years. Now scientists have found that applying pressure can change the properties of these inexpensive materials and how they respond to light.
Solar cells made of artificial metallic crystalline structures called perovskites have shown great promise in recent years. Now Stanford University scientists have found that applying pressure can change the properties of these inexpensive materials and how they respond to light.
"Our results suggest that we can increase the voltages of perovskite solar cells by applying external pressure," said Hemamala Karunadasa, an assistant professor of chemistry at Stanford. "We also observed a dramatic increase in the electronic conductivity of these promising materials at high pressures."
Karunadasa and Stanford colleague Wendy Mao presented their findings in the April 6 online edition of the journal ACS Central Science.
Perovskites come in several crystalline structures, including hybrid perovskites made of lead, iodine or bromine, and organic compounds. The inexpensive materials have potential applications in advancing LEDs and lasers, but one of the hottest areas of research involves solar cells. Recent studies have shown that hybrid perovskites efficiently absorb sunlight and convert it to electricity. Several labs have achieved efficiencies above 20 percent, rivaling commercially available silicon solar cells.
In the ACS Central Science study, Karunadasa and Mao sought to assess how pressure affects the way hybrid perovskites respond to light. To find out, the researchers loaded perovskite samples in a diamond-anvil cell, a high-pressure device consisting of two opposing diamonds. Each tiny sample was placed between the diamonds and then squeezed at very high pressures.
The results were visible. One sample, which is normally orange, turned lighter in color under compression, an indication that the perovskite was absorbing higher-energy light waves. But as the pressure increased, the sample darkened, indicating that lower-energy light was also being absorbed.
"Our findings suggest that compression can allow us to tailor the wavelength of absorbed light," said Mao, an associate professor of geological sciences at Stanford and of photon science at SLAC. "This compression may be attained through either mechanical or chemical means."
Several research groups have been developing low-cost tandem solar cells made of perovskite stacked on top of silicon. But obtaining the high voltages required for high-efficiency tandem cells has proven difficult. The results of the new Stanford study suggest that pressure can increase the voltages of perovskite solar cells and should be investigated further.
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The monthly Coppock Indicators finished March

DJIA: 17685.09 -18 Down. NASDAQ:  4869.85 +33 Down. SP500: 2059.74 -22 Down. 

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