Baltic Dry Index. 642
-01 Brent Crude 48.09
Brexit odds checker.
http://www.oddschecker.com/politics/british-politics/eu-referendum/referendum-on-eu-membership-result
Brexit Quote of the Day.
Freedom
is the right to tell people what they do not want to hear.
George
Orwell.
Sell
in May, go away has never looked better this year. The Fedster’s next interest
rate rise, is on again for June, apparently, after a few weeks of being off for
June. I’m glad I’m not a professional
money manager, attempting long term pension planning in the central bankster bond
bubble era of the Fed’s final bubble.
In
the oil patch, despite rising production difficulties in Nigeria, America, and
Canada, global demand is slowing along with production, so Brent crude failed
to take out $50 and is back at $48 again. My guess is that at higher prices,
China simply slows down purchases for their strategic reserve. One side plays
with the spigot of production, the other side plays with the spigot of demand. Both sides ignore rising signs of recession
approaching America, and a crash landing approaching China.
The whole history
of civilization is strewn with creeds and institutions which were invaluable at
first, and deadly afterwards.
Walter Bagehot.
Asian stocks choppy as Fed news turns investors wary
Published: May 18, 2016 11:55 p.m. ET
Analysts say possibility of U.S. rate hike could shake up markets
Shares in Asia were choppy and shares were sliding — except in China and Japan — as many investors grow cautious about the stronger chance that U.S. interest rates will rise in June.In China, the Shanghai Composite SHCOMP, +0.42% recently rose 0.6%, while Japan’s Nikkei Stock Average NIK, -0.07% opened higher but pared gains to recently trade about flat. But Hong Kong’s Hang Seng Index HSI, -0.50% dropped 0.4%, Korea’s Kospi SEU, -0.57% fell 0.5% and Australia’s ASX/S&P 200 XJO, -0.93% sank 0.7%.
Many investors across the Asia-Pacific region pulled back after the U.S. Federal Reserve’s April meeting minutes suggested a June interest-rate increase was still in the cards if data supported the case that the American economy was getting stronger.
The U.S. dollar strengthened against its major peers after the minutes were released, putting pressure on some Asia-Pacific stock markets and prices for commodities.
“In Asia it should be quite negative — especially in emerging markets we have seen the USD bid higher” against Asian currencies, said Tareck Horchani, a senior sales trader at Saxo Capital Markets. “This rate hike is not really a good sign. I believe we might see some larger correction in Asia over the next few days.”
Investors were initially more positive in Japan, where stocks were up as much as 0.5% in the early morning. Shares gained after the yen weakened overnight.
A weaker currency helps Japanese exporters, who can sell their goods at more competitive prices overseas and can increase earnings made abroad when they are repatriated into yen.
More
Fed Puts June Rate Increase on Table Provided Economy Says Go
May 18, 2016 — 11:10 PM BST
Federal Reserve officials want to raise interest rates in June. Now, it is
up to the U.S. economy to confirm their view that slow growth in the first quarter
was temporary.Minutes of the April 26-27 Federal Open Market Committee meeting released Wednesday in Washington used the word “June” six times in a policy context. That signal follows several speeches by regional Fed bank presidents warning investors not to dismiss a mid-year hike after the odds of such a move edged close to zero.
“The Fed put the June hike relatively aggressively on the table so long as the economic data continues to show positive signs,” said Tony Bedikian, managing director of global markets for Citizen’s Bank in Boston.
Chair Janet Yellen will have an opportunity to harden the impression that a June move is on the cards when she speaks at Harvard University on May 27. The World Affairs Council of Philadelphia has also announced she will address their members on June 6. That’s on the eve of the blackout period before the next FOMC meeting on June 14-15, and three days after the release of the May U.S. employment report.
More
In China news, Q1 16s one trillion
credit/debt expansion seems to have been a one off boost to the economy. At
least according to an unnamed authority speaking through the People’s Daily.
Time will tell if it is, but if it is/was, a string of Chinese debt defaults
lies ahead this summer. Uncle Scam heats up his trade war with the Middle
Kingdom. Bunker time I think.
China’s Debt Bomb: No One Really Knows The Payload
by ZeroHedge •
No one knows if it’s a hand grenade or a nuclear warhead
The ramp up in Chinese debt accumulation has been a leading concern of investors for years. The average total debt of emerging market economies is 175% of GDP, and skyrocketing corporate non-financial debt has launched China far beyond that number.The real question is: by how far?
The answer is disconcerting, as VisualCapitalist’s Jeff Desjardins warns, because nobody really knows.
If the Chinese debt bomb is detonated, the impact on markets is anybody’s guess. Kyle Bass says the losses would be 5x that of the subprime mortgage crisis, while Moody’s says the bomb will be safely disarmed by authorities far before it goes off.
In today’s chart, we look at
various estimates to the size of China’s debt bomb, its payload, and what might
spark the fuse…
----Mckinsey came out with a widely-publicized estimate of China’s debt at the beginning of 2015. Using figures up to Q2 2014, they estimated that total Chinese debt was 282% of GDP, an increase from 158% in 2007.
Since then, various trusted organizations have come up with follow-up estimates.
On the low end, Goldman Sachs came out with an estimate in January 2016 of 216% total debt-to-GDP for 2015. (A few months later, they put out a separate report saying that total debt-to-GDP was estimated to be closer to 270% for 2016.)
On the high end, Macquarie analyst Viktor Shvets said that China’s debt was $35 trillion, or “nearly 350%” of GDP.
The truth is that it’s anybody’s guess. China’s official estimates are fairly useless, and the country has a massive and quickly evolving shadow banking sector that complicates these projections significantly.
----Total debt is made up of various components, including government, corporate, banking, and household debts.
In the case of China, it is corporate debt that is particularly explosive. According to Mckinsey, the country’s corporate sector already has a higher debt-to-GDP than the United States, Canada, South Korea, or Germany, even while still being considered an “emerging market”.
S&P Global Ratings now figures that Chinese corporate debt is in the 160% range, up from 98% in 2008. The current number in the United States is a less ominous 70%.
China’s central bank is just as concerned as anyone else. Here’s what the Governor of the People’s Bank of China, Zhou Xiaochuan, had to say about a month ago:
Lending
as a share of GDP, especially corporate lending as a share of GDP, is too high.
More
China to support steel exports as U.S. imposes hefty tariffs
China said it would persist with controversial tax rebates to steel
exporters to support the sector's painful restructuring, defying a United
States move to impose punitive import duties on Chinese steel products.
A worldwide steel glut has become a major trade irritant, with China
under fire from global rivals who say it is dumping cheap exports after a
slowdown in demand at home.
In a marked escalation of the spat, the United States on Tuesday said it
would impose duties of more than 500 percent on Chinese cold-rolled flat steel,
widely used for car body panels, appliances and in construction.
However, China's Ministry of Finance said it would "continue to
implement a tax rebate policy on steel exports" as it tries to finance a
costly capacity closure plan.
By far the world's largest steel producer, China plans to eliminate
100-150 million tonnes of annual production - more than the U.S. produces per
year - over the next five years. The cabinet said central government-controlled
firms will cut steel and coal production capacity by a tenth in 2016-17.
---- China's Commerce Ministry expressed its "strong dissatisfaction" with the U.S. ruling, and said the United States should rectify its mistakes as soon as possible.
"The United States adopted many unfair methods during the
anti-dumping and anti-subsidy investigation into Chinese products, including
the refusal to grant Chinese state-owned firms a differentiated tax rate,"
it said.
The Group of Seven rich nations plans to address the steel glut when it
meets in Japan later this month, in a move seen likely to add to pressure on
China.
Analysts said the potential closing off of the U.S. market would not
substantially reduce China's exports, accounting for just 2 percent of its
total shipments.
More
And there was more disconcerting economic
news from Asia too.
Japan machinery orders points to spending slowdown
Japan's core machinery orders rose more than expected in March but
companies expect orders to decline in the current quarter as firms become
increasingly cautious due to a rising yen and weakness in overseas economies.
The 5.5 percent rise in core orders was more than the median estimate
for a 0.5 percent increase in a Reuters poll of analysts. In February, core
orders fell 9.2 percent.
Companies surveyed by the Cabinet Office forecast core orders, which
exclude those of ships and electric power utilities, would fall 3.5 percent in
the April-June quarter.
The data suggests companies are starting to delay their investment plans
due to uncertainty about the overseas economy and signs that domestic consumer
spending is struggling to gain momentum.
"Capital expenditure has entered a period of stagnation," said
Hiroaki Muto, economist at Tokai Tokyo Research Center.
More
We
end for today with the EUSSR, where in Brexit news, Project Fear says that if
we leave, youth unemployment will soar to the levels of Greece and Italy. And
the Thames will turn to blood and a plague of locusts will arrive, and I don’t mean
migrants, but Project Fear is holding these in reserve for nearer the date.
Today, an update on Merkel’s Migrant Madness. They may not be much in the news,
but they haven’t gone away. Just wait until things really start falling apart
later in the year.
EU appeals to states as migrant moves 97 percent short of target
EU states virtually ignored a European Commission target for them to
take in some 20,000 asylum seekers from Greece and Italy by mid-May, the bloc's
executive said on Wednesday, renewing a call for more action.
In a regular report on its emergency relocation scheme, which aims to
move refugees from the Mediterranean frontline to the rest of the European
Union, the EU executive's data showed only 563 asylum seekers had been moved
since it set the 20,000 target two months ago -- only 3 percent of the increase
needed.
In total, 1,500 people have now been relocated since the scheme began
late last year, a tiny fraction of the 160,000 that governments agreed to take
after fractious negotiations in the face of an unprecedented surge in arrivals
in Italy and Greece.
Noting that, since the closure of the Balkan route to Germany, some
46,000 migrants are now in Greece waiting for asylum claims to be processed,
Migration Commissioner Dimitris Avramopoulos said: "We cannot be satisfied
with the results achieved so far. More has to be done, and swiftly."
Some of the 28 member states, notably formerly communist countries in
the east, have fiercely opposed Commission pressure on them to take in
refugees, while most other governments have shown little enthusiasm for a
scheme unpopular with many voters.
Migrants set fire to Lampedusa migrant shelter in protest
A group of migrants set fire to a shelter on the Mediterranean island of
Lampedusa on Tuesday that caused no injuries, an Italian fire official said,
marking an increase in tensions in Italy's packed centers as arrivals continue.
Lampedusa's mayor, Giusi Nicolini, said one building was set ablaze and
the four men suspected of lighting it had been identified. Several mattresses
were set on fire, but the extent of the damage was not yet determined, a fire
department spokesman said.
Two other times, in 2009 and in 2011, fire destroyed portions of the
migrant center, which has been the first port of call for tens of thousands of
boat migrants sailing to Europe from Africa.
In the past two years, more than 320,000 boat migrants have arrived on
Italian shores and many made their way north, bypassing European Union rules.
So far this year, more than 31,000 have arrived and Italian shelters are
bursting at the seams even before the expected summer surge.
More
“When it becomes necessary for a state to declare itself bankrupt, in
the same manner as when it becomes necessary for an individual to do so, a
fair, open and avowed bankruptcy is always the measure which is both least
dishonorable to the debtors and least hurtful to the creditor”
Adam Smith
At
the Comex silver depositories Wednesday final figures were: Registered 29.67 Moz, Eligible 123.67 Moz, Total 153.34 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, the St Louis Fed lets out the truth on NIRP.
The real problem with negative interest rates? They are a stealth tax
Published: May 18, 2016 2:31 a.m. ET
Someone has to pay for negative rates, either banks, borrowers or depositors
LONDON (MarketWatch) — Central banks have slashed interest rates to
nothing. They have printed money on a vast scale. Where that has not quite
worked, and if we are being honest that is most places, they now have a new
tool. Negative interest rates. Across a third of the global economy, money you
put in the bank does not only generate nothing in the way of a return. You
actually get charged for keeping it there.
That is already producing strange, Alice-in-Wonderland economics, where
nothing is quite what it seems. Governments want you to delay paying taxes as
long as possible, the mortgage company pays you to stay in the house, and cash
becomes so sought after there is even talk of abolishing it.
But the real problem with negative rates may be something quite
different.
As a fascinating
new paper
from the St. Louis Fed argues, they are in fact a form of tax. They impose a levy
on the banking system that has to be paid by someone — and that someone is
probably us. That may explain why central banks and governments are so keen on
them. Hugely indebted governments are always in the market for a new tax,
especially one that their voters probably won’t notice. But it also explains
why they don’t really work — because most of the economics in trouble,
especially in Europe, are already suffocating under an impossible high tax
burden.
Negative interest rates have, like a fast-mutating virus, started to spread across the world.
The Swiss first tried them out all the way back in the 1970s. In June 1972 it imposed a penalty rate of 2% a quarter on foreigners parking money in Swiss francs amid the turmoil of the early part of that decade, but the experiment only lasted a couple of years. In the modern era, the European Central Bank kicked off the trend in June 2014 with a negative rate on selected deposits.
Since then, they have spread to Sweden, Denmark, Switzerland (again), and more recently Japan, while the ECB has cut even deeper into negative territory. They already cover about a third of the global economy, and there is no reason why they should not reach further. The Fed might be raising rates this year, but it is the only major central bank to do so, and if, or rather when, there is another major downturn, it may have no choice but to impose negative rates as well.
----In fact, negative rates are a form of stealth tax. In a paper this month, the St. Louis Fed published a paper arguing that negative rates were a form of tax. Why? Because they effectively impose a levy on bank reserves, in the sense that instead of just parking reserves with the central bank at zero cost, or with some modest rate of interest, they now have to pay for the privilege.
And just like any levy imposed on companies, that has to be passed along
somehow — in higher charges for customers, or lower wages, or lower dividends.
Wherever the bill ends up, someone eventually has to pay. “At the end of the
day, negative interest rates are taxes in sheep’s clothing,” it concludes.
More
Brexit The Animated Movie.
Brexit
Quote of the week.
BBC "the propaganda arm
of the EU."
Martin
Durkin. Brexit Filmmaker.
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?
Microwaved nanoribbons may bolster oil and gas wells
Researchers microwave a composite to toughen wellbore walls
Date:
May 12, 2016
Source:
Rice University
Summary:
Researchers have microwaved composite materials of graphene nanoribbons and
thermoset polymers to dramatically reinforce wellbores.
Wellbores drilled to extract oil and gas can be dramatically reinforced
with a small amount of modified graphene nanoribbons added to a polymer and
microwaved, according to Rice University researchers.
The Rice labs of chemist James Tour and civil and environmental engineer
Rouzbeh Shahsavari combined the nanoribbons with an oil-based thermoset polymer
intended to make wells more stable and cut production costs. When cured in
place with low-power microwaves emanating from the drill assembly, the
composite would plug the microscopic fractures that allow drilling fluid to
seep through and destabilize the walls.
Results of their study appeared in the American Chemical Society journal
ACS Applied Materials and Interfaces.
The researchers said that in the past, drillers have tried to plug
fractures with mica, calcium carbonate, gilsonite and asphalt to little avail
because the particles are too large and the method is not efficient enough to
stabilize the wellbore.
In lab tests, a polymer-nanoribbon mixture was placed on a sandstone
block, similar to the rock that is encountered in many wells. The team found
that rapidly heating the graphene nanoribbons to more than 200 degrees Celsius
with a 30-watt microwave was enough to cause crosslinking in the polymer that had
infiltrated the sandstone, Tour said. The microwave energy needed is just a
fraction of that typically used by a kitchen appliance, he said.
"This is a far more practical and cost-effective way to increase
the stability of a well over a long period," Tour said.
In the lab, the nanoribbons were functionalized -- or modified -- with
polypropylene oxide to aid their dispersal in the polymer. Mechanical tests on
composite-reinforced sandstone showed the process increased its average
strength from 5.8 to 13.3 megapascals, a 130 percent boost in this measurement
of internal pressure, Shahsavari said. Similarly, the toughness of the
composite increased by a factor of six.
"That indicates the composite can absorb about six times more
energy before failure," he said.
MoreThe monthly Coppock Indicators finished April
DJIA: 17773.64-19 Down. NASDAQ: 4775.36 +11 Down. SP500: 2065.30 -21 Down.
No comments:
Post a Comment