Baltic Dry Index. 703
+04 Brent Crude 46.51
"In
economics, hope and faith coexist with great scientific pretension."
John
Kenneth Galbraith.
We open with the US
employment numbers released last Friday, which were so good as to be almost
scripted. They wouldn’t do that would they? We’ll let David Stockman answer
that question with a master class at deflating bogus statistics.
Wall Street Monkeyshines—— Look Ma, No Hands!
by David Stockman • July 9, 2016
The boys and girls on Wall Street are now riding their bikes with no
hands and eyes wide shut. That’s the only way to explain Friday’s lunatic
buying spree in response to another jobs report that proves exactly
nothing about an allegedly resurgent economy.
When the S&P 500 first hit 2130 back in May 2015, reported LTM
earnings were $99.25 per share, and that was already down 6.4% from the
cyclical high of $106 per share in September 2014. Thus, stocks were being
valued at a nosebleed 21.5X in the face of falling earnings.
During the four quarters since then, reported LTM earnings have slumped
by a further 12.3% to $87 per share. So that brings
the “cap rate” to 24.5X earnings that have shrunk by 18% over
the last six quarters. Wee!
You have to use the parenthetical because the casino is not capitalizing
anything rational. It’s just drifting higher in daredevil fashion until something
big and nasty stops it.
That something would be global deflation and US recession. Both are
racing down the pike at accelerating speed.
Needless to say, when these lethal economic forces finally hit
home, the puppy pile-up on Wall Street is going to be one bloody mess. But
that’s the price you pay when you have destroyed honest price discovery
entirely, and have transformed the money and capital markets into robo-machine
driven venues of rank speculation.----That’s the essence of what happened with the June jobs report. Within minutes of its release, Dow-Jones’ MarketWatch turned the June reports report into a stock market ignition switch:
Hiring in the U.S.
roared back in June with a gain of 287,000 new jobs, largely
putting to rest lingering worries that the labor market and broader economy had
taken a turn for the worse…..The sharp rebound in hiring last month…..
suggest(s) the labor market remains the healthiest it’s been in years.
The June jobs report also offers confirmation the U.S. economy is expanding at
a moderate pace and keeping a seven-year-old recovery intact.
Except the internals and trends of the report didn’t say that at
all. MarketWatch was just dispensing algo-reader headline bait.
Indeed, within another hour or so, one of the great market analysts
still in business, David Rosenburg, dispatched the euphoria with alacrity:
The simple fact of the matter
is that May and June were massive statistical anomalies. The broad
trends tell the tale. Go back to June 2014 and the six-month trend in payrolls
is running at a 2.2% annual rate and the three-month trend at 2.4%.
A year ago, as of June 2015, the six-month pace was 1.9% and the three-month at
2.2%. Fast forward to today, and the six-month annualized rate is
1.4% and the three-month has slowed all the way down to a 1.2%.
This is otherwise known as looking at the big picture.
In fact, you don’t even have to puzzle through the wild swings emanating
from the BLS random numbers generator to know that the actual US economy
and labor market is weakening rapidly.
That is, the BLS establishment survey gains of 144k, 11k and 287k for
April, May and June, respectively, amount to a statistical average of
147,000. But that tells you nothing about the trend and almost
certainly overstates what is actually happening in the jobs market.
As we have long insisted, there is absolutely no need for the
essentially useless BLS employment report in the first place. That’s
because the daily payroll tax withholding receipts of the US Treasury tell you
all you need to know, and with one huge advantage to boot.
Now, according to the US treasury’s cash box, June employment did not
come “roaring” back at all. To the contrary, it has continued to
skid, and has been for several months now.
To wit, compared to a 5-6% average annual gain late last year, the
collections trend has now fallen to just 3%. Strip out of that the 2.6%
annualized rate of hourly wage and salary inflation reported for June
and you get hardly a 0.5% growth in real labor inputs.
Morehttp://davidstockmanscontracorner.com/wall-street-monkeyshines-look-ma-no-hands/
Next, in other more belligerent news, China, Japan, and America prepare for the next decade’s war. The American War Party gets a new belligerent ally in Asia as it seeks to blockade Russia-China. Madness leading to a nuclear war? Who knows. But to this old conservative dinosaur in faraway London, that seems to be the Motorway we’re travelling on.
Beijing’s South China Sea Options, From Benign to Belligerent
July 10, 2016 — 10:00 PM BST
An international tribunal will rule Tuesday on a Philippine
challenge to China’s assertion to more than 80 percent of the South China Sea,
one of the world’s busiest waterways.The Philippines contests China’s “historic rights” claim based on a 1940s map that shows a dashed line covering around 1.4 million square miles (3.6 million square kilometers). China has said it doesn’t recognize the jurisdiction of the tribunal in The Hague and will ignore its findings, which will binding on both countries as signatories to the United Nations Convention on the Law of the Sea but lacks a mechanism for enforcement.
Whatever the outcome, China will probably respond to the ruling (for an explainer on the territorial disputes, click here). And unless the report is 100 percent favorable for Beijing, its options could range from benign to aggressive:
Benign
- Faced with a nationalistic population demanding China protect its sovereignty, the foreign ministry issues a strongly worded statement outlining its refusal to accept the court’s jurisdiction and vowing to ignore the ruling.
- Beijing extends its media campaign, proclaiming the support of more than 60 countries for its position (a list it has so far not published in full).
- On the ground, however, China works to reduce tensions by pulling back on the harassment of Filipino fishermen. It refrains from adding military installations to reclaimed reefs in the Spratlys chain and leaves the Scarborough Shoal uninhabited.
- Military ceases its radio warnings to military aircraft from other countries flying over features it claims. Diplomatically, it extends an invitation of direct talks to new Philippine President Rodrigo Duterte.
Moderately Assertive
- China declares an Air Defense Identification Zone, ordering commercial and military aircraft to lodge flight plans with it. It announced an ADIZ over parts of the the East China Sea disputed with Japan in 2013, but in practice has had difficulty enforcing it, and the U.S. would probably ignore one over the South China Sea.
- Steps up patrols by its coast guard and navy, recommences harassment of fishermen and its blockade of the BRP Sierra Madre, a former naval vessel run aground by the Philippines on the Second Thomas Shoal.
- China leaves UNCLOS, unwilling to accept the constraints of international law when it clashes with its own interests.
Assertive
- China starts building on Scarborough Shoal, which it seized from the Philippines in 2012. Radar, aircraft or missiles based there could reach Manila and bases in the Philippines to be used by U.S. forces. It also turns existing artificial islands into mini-bases by finishing runways, expanding port facilities and installing offensive missile systems and troops.
- Drags the Sierra Madre off its position on the Second Thomas Shoal, as suggested in a June editorial by the People’s Daily.
- Specifies the coordinates of its nine-dash line, declares it to be a territorial demarcation boundary and solidifies its claim for all the waters, resources and features that lie within it.
http://www.bloomberg.com/news/articles/2016-07-10/beijing-s-south-china-sea-options-from-benign-to-belligerent
Beijing says should be no South China Sea talk at Asia-Europe summit
The South China Sea is not on the agenda and should not be discussed at
a major summit between Asian and European leaders in Mongolia at the end of the
week attended by China's premier, a senior Chinese diplomat said on Monday.
The Asia-Europe Meeting, or ASEM, will be the first important diplomatic
gathering after the July 12 ruling by an arbitration court hearing a dispute
between China and the Philippines over the South China Sea in the Dutch city of
The Hague.
Tensions and rhetoric have been rising ahead of the ruling, a case which
China has refused to recognize or participate in, saying the court has no
jurisdiction and China cannot be forced to accept dispute resolution.
China has repeatedly blamed the United States for stirring up trouble in
the South China Sea, where its territorial claims overlap in parts with
Vietnam, the Philippines, Malaysia, Brunei and Taiwan.
Chinese Assistant Foreign Minister Kong Xuanyou signaled discussion of
the South China Sea would not be welcomed at the event, which happens once
every two years, as it's designed to discuss issues between Asia and Europe.
"The ASEM leaders summit is not a suitable place to discuss the
South China Sea. There are no plans to discuss it there on the agenda for the
meeting. And it should not be put on the agenda," Kong told a news
briefing.
However, Beijing-based diplomats involved with preparations for ASEM say
that it is inevitable that the South China Sea dispute will be raised.
Aside from Chinese Premier Li Keqiang, other attendees expected are
Japanese Prime Minister Shinzo Abe, German Chancellor Angela Merkel and top
European Union officials.
Morehttp://www.reuters.com/article/us-southchinasea-ruling-idUSKCN0ZR0BM?il=0
Meanwhile in Japan, did the voters just vote to resume World War Two against China? Stay long fully paid up physical gold and silver against Asian developments.
Japan ruling bloc election win threatens regional stability: Xinhua
China's official news agency said on Monday a win for Japanese Prime
Minister Shinzo Abe's ruling bloc in upper house elections posed a danger to
regional stability, with lawmakers who favor revising the pacifist constitution
holding a "super majority".
Commentaries by the Xinhua news agency are not formal government
statements but often reflect official thinking in China, where memories of
Japan's past militarism still spark outrage.
Final counts showed Abe's coalition and allies obtained two-thirds of
the seats in the chamber which, with the ruling bloc's super majority in the
lower house, opens the door to revising the constitution for the first time
since its adoption after Japan's defeat in World War Two.
"With Japan's pacifist constitution at serious stake and Abe's
power expanding, it is alarming both for Japan's Asian neighbors, as well as
for Japan itself, as Japan's militarization will serve to benefit neither
side," the Xinhua commentary said.
Forging agreement within Japan's diverse pro-revision camp on what to
change, however, will be a struggle and getting a majority of voters to sign
off in a referendum even tougher.
"It's the first time to have two-thirds in both houses of
parliament, but you can't find any issue on which the two-thirds can
agree," said Gerry Curtis, professor emeritus at New York's Columbia
University.
The constitution's war-renouncing Article 9, if taken literally, bans
the maintenance of armed forces. Successive governments have interpreted it to
allow a military for self-defense, a concept that Abe last year stretched to
allow Japan's military to aid friendly nations that come under attack.
Revising Article 9 would likely be largely symbolic. Still, convincing
the Komeito party, the more dovish junior partner in Abe's Liberal Democratic
Party-led coalition, to agree would be challenging. The pro-revision camp might
well tackle another amendment first.
One possibility is a clause giving the government more power in a
national emergency. That would also spark a divisive debate because critics say
it would curtail civil rights.
Another option, floated by the Komeito, would be to add an environmental
protection clause, a less contentious step that would nonetheless break the
political taboo on revision.
It is unclear whether Abe's conservative base would be satisfied.
"Conservatives see the constitution as emasculating the nation," said
Jeffrey Kingston, director of Asian studies at Temple University in Tokyo.
http://www.reuters.com/article/us-japan-election-stability-idUSKCN0ZR059Japan LDP policy chief Inada calls for changing pacifist constitution
The policy chief of Japan's ruling Liberal Democratic Party on Sunday
called for changing the nation's pacifist constitution after the ruling
coalition won a landslide victory in an election for parliament's upper house.
Prime Minister Shinzo Abe's ruling coalition and like-minded parties
also got the two-thirds "super majority" needed to try to revise the
post-war constitution for the first time, some TV exit polls showed, although
others only said it was within their grasp.
"Our party is one that calls for reforming the constitution,"
said Tomomi Inada, policy chief of the leading Liberal Democratic Party, after
the polls closed.
"Our party has already submitted a draft for reforming the
constitution."
http://www.reuters.com/article/us-japan-election-inada-idUSKCN0ZQ0GF"Gold bears the confidence of the world's millions, who value it far above the promises of politicians, far above the unbacked paper issued by governments as money substitutes. It has been that way through all recorded history. There is no reason to believe it will lose the confidence of people in the future."
Oakley R. Bramble
At the Comex silver depositories Friday final figures were: Registered
25.06 Moz,
Eligible 125.37 Moz, Total 150.43 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, welcome to the geriatric, EUSSR Mutual Admiration Society.
The two people, who behind Dodgy Dave Cameron and President Obama, who are most
responsible for Brexit. By sending Dodgy Dave into the referendum with nothing
but an empty envelope to sell to his voters, Juncker and Schultzie arrogantly
sealed the EUSSR’s fate. Below, it doesn’t sound to me like the rump EU27 will ever reform, so it probably won’t last.
The whole history
of civilization is strewn with creeds and institutions which were invaluable at
first, and deadly afterwards.
Walter Bagehot.
Interview with Juncker and Schulz: 'Deadly for Europe'
Interview Conducted by Klaus Brinkbäumer,
Horand Knaup and Michael Sauga
July 08, 2016 – 06:23 PM
SPIEGEL: Mr. Juncker, who was the first person you talked to after hearing the
news of Brexit?
Juncker: With Martin Schulz. He's in the habit of talking to me on the phone
each morning between 7 and 8 a.m. It's a habit I sometimes wish he could drop.
Schulz: I seem to remember it being between 6 and 7 a.m. I was shocked. In the
days before the vote, I bet that the British would stay in the EU.
Juncker: I put my money on Brexit. The EU Financial Stability Commissioner,
Jonathan Hill from Britain, still owes me a pound. (Eds. Note: Hill
announced his resignation from the Commission in the wake of the Brexit vote.)
SPIEGEL: What did you say on the phone?
Schulz: I said: "Jean-Claude, I think this isn't going well." Then I
advocated for a quick response from the EU. The last thing we need right now is
uncertainty.
Juncker: I shared his opinion. It was important for the Brits to trigger Article
50 as quickly as possible in order to avoid any uncertainties. That was also
the tenor of the press release the European Commission, Parliament and Council
issued afterward.
SPIEGEL: Just like on that Friday, you often present yourselves as extremely
tight political partners. Can you appreciate that some in Europe see your
relationship as cronyism?
Juncker: Nonsense. Martin and I lead the two important community institutions,
whose tasks include working together in confidence. After 30 years in Brussels,
I can tell you: The relationship between the Commission and the Parliament has
probably never been as good as it is now.
SPIEGEL: That's precisely what many people find problematic. Parliaments are
ultimately responsible for keeping governments in check -- not acting as their
reinforcements.
Schulz: There can be no talk of reinforcements. Jean-Claude and I are fully
aware that we have different roles. There's also friction between us, for
instance with the agreement for visa liberalization for Turkey. The Commission
sent us a proposal. While 66 of our 72 conditions had been met, many of the
most important ones had not been, including the reform of anti-terror laws. So
we put the agreement on ice. The Commission very often has a very unpleasant
time in Parliament.
Juncker: I don't let it get to me. I said in my inaugural address that I am not
the Council's secretary, nor am I the Parliament's lackey. That can sometimes
lead to conflicts, which are defused through dialogue. Martin invariably knows
what the Commission thinks, and I'm well informed about the sensitivities of
the Parliament.
SPIEGEL: The day after Brexit, Martin Schulz and Sigmar Gabriel, who is the head
of Germany's Social Democratic Party (SPD), to which Schulz belongs, presented
plans for sweeping reform in the EU. These plans foresee turning the Commission
into a proper European government, one that is regulated by the European
Parliament and by a kind of federal council of member states. The plan would
mean a significant loss of power for member state governments. What do you
think of the plan?
Juncker: The proposal in and of itself is convincing, but it doesn't suit the
times. To implement it, the European treaties would have to be amended.
Martin's plan is a long-term project that cannot currently be implemented due
to the mood on the continent. But where the community can achieve more on the
basis of existing treaties, we should do so.
Schulz: I completely agree with Jean-Claude. I'm fully aware that my vision of
a European bicameral parliament can't be implemented tomorrow. I'm also not an
integration fanatic. We agree: Brussels can't regulate everything. I'm driven
by something else: There are forces in Europe that want to generally give
national policy priority over a common European approach. We have to prevent
this.
SPIEGEL: Nevertheless, many in Europe see you as being symbolic of the backroom
technocratic politics that is associated with the European Union and the euro.
Some have even accused you of being responsible for Brexit. Do you plead
guilty?
Juncker: No, why should I? In the end, the British didn't vote to leave because
of the euro. They're not even members of the currency union. Even the refugee
crisis hardly affected the country. I have another explanation: In its 43 years
of EU membership, Britain has never been able to decide whether it wants to
fully or only partially belong to the EU.
Schulz: Primary responsibility for Brexit lies with British conservatives, who
took an entire continent hostage. First, David Cameron initiated the referendum
in order to secure his post. Now, fellow conservatives want to delay the start
of exit negotiations until they've held a party conference. And regarding
detractors: I'm proud of the fact that Ms. Le Pen in France insults me and Mr.
Wilders in the Netherlands calls me his opponent. The way I see it is, if these
people weren't attacking me, I would be doing something wrong.
SPIEGEL: Criticism isn't only coming from right-wing populists. Mr. Juncker, the
Polish and Czech foreign ministers have called for your resignation. They feel
the Commission is too domineering.
Juncker: After these reports came across the wire, I spent hours sitting at the
same table as the Polish prime minister at the European Council. She made no
mention of any resignation. And the Czech prime minister assured me during a
recent visit that he thought I should definitely stay in office.
SPIEGEL: Do you deny that a number of Eastern European countries feel that the
Commission has been too domineering -- with the specification that quotas be
established for accepting refugees, for example?
Juncker: I have a different understanding of the word "specification."
Sure, the Commission suggested the quota, but it was the council of interior
ministers that ratified it with a qualified majority. Furthermore, the
Commission helped negotiate the agreement with Turkey and thus delivered the
decisive contribution to solving the refugee crisis.
SPIEGEL: Eastern Europeans see it differently. In their eyes, it was the border
closures along the Balkan route that led to the numbers dropping.
Juncker: Without the Turkey agreement, tens of thousands of refugees would still
be stuck in Greece. The Commission presented proposals for securing Europe's
external borders early on, but they languished in the Council for months. As
you can see, the Commission isn't asleep. Oftentimes it has to wake up the
others.
SPIEGEL: Do you also need to be woken up, Mr. Schulz?
Schulz: Not at all. It's long been routine that member states blame the
Commission for everything they can't agree upon. The scapegoat is always
Jean-Claude Juncker. Should I give you a few examples?
SPIEGEL: Please.
More
EU's Tusk says Brexit could threaten western political civilization
If
Britons vote to leave the European Union in a June 23 referendum it could be
the beginning of the end for the 28-nation bloc and for western political
civilization more generally, European Council President Donald Tusk said.
In
an interview with German newspaper Bild, Tusk said a so-called Brexit vote
would provide a major boost to radical anti-European forces who he said would
be "drinking champagne".
"Why
is it so dangerous? Because no one can foresee what the long-term consequences
would be," Tusk said. "As a historian I fear that Brexit could be the
beginning of the destruction of not only the EU but also of western political civilization
in its entirety."
More
"We are in a world of irredeemable paper money - a state of affairs unprecedented in history."
John Exter
Solar & Related Update.
With events
happening fast in the development of solar power and graphene, I’ve added this
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?
Tunable wetting and adhesion of graphene demonstrated
Date:
July 7, 2016
Source:
University of Illinois College of Engineering
Summary:
Researchers have demonstrated doping-induced tunable wetting and adhesion of
graphene, revealing new and unique opportunities for advanced coating materials
and transducers. The study suggests for the first time that the doping-induced
modulation of the charge carrier density in graphene influences its wettability
and adhesion.
Researchers from the University of Illinois at Urbana-Champaign have
demonstrated doping-induced tunable wetting and adhesion of graphene, revealing
new and unique opportunities for advanced coating materials and transducers.
"Our study suggests for the first time that the doping-induced
modulation of the charge carrier density in graphene influences its wettability
and adhesion," explained SungWoo Nam, an assistant professor in the
Department of Mechanical Science and Engineering at Illinois. "This work
investigates this new doping-induced tunable wetting phenomena which is unique
to graphene and potentially other 2D materials in complementary theoretical and
experimental investigations."
Graphene, being optically transparent and possessing superior electrical
and mechanical properties, can revolutionize the fields of surface coatings and
electrowetting displays, according to the researchers. A material's wettability
(i.e. interaction with water) is typically constant in the absence of external
influence and are classified as either water-loving (hydrophilic) or
water-repelling (hydrophobic; water beads up on the surface). Depending on the
specific application, a choice between either hydrophobic or hydrophilic
material is required. For electrowetting displays, for example, the hydrophilic
characteristics of display material is enhanced with the help of a constant
externally impressed electric current.
"What makes graphene special is that, unlike conventional bulk
materials, it displays tunable surface wetting characteristics due to a change
in its electron density, or by doping," said Ali Ashraf, a graduate
student researcher and first author of the paper, "Doping-Induced Tunable
Wettability and Adhesion of Graphene," appearing in Nano Letters.
"Our collaborative research teams have discovered that while graphene
behaves typically as a hydrophobic material (due to presence of strongly held
air-borne contamination on its surface), its hydrophobicity can be readily
changed by changing electron density.
"Our study shows for the first time that graphene demonstrates
tunable wettability -- switchable hydrophobic and hydrophilic behavior -- when
its electron density is changed by subsurface charged polymers and metals
(a.k.a. doping)," Ashraf added. "This finding sheds lights on
previous unclear links between quantum-level charge transfer and macroscopic
surface wettability for graphene. This exciting finding opens new doors of
possibility for tunable surface coating and electrowetting displays without
continuous external electric current supply, which will translate into
significant energy savings."
More"If you don't trust gold, do you trust the logic of taking a beautiful pine tree, worth about $4,000 - $5,000, cutting it up, turning it into pulp and then paper, putting some ink on it and then calling it one billion dollars?"
Kenneth J. Gerbino
The monthly Coppock Indicators finished June
DJIA: 17930
-14 Up NASDAQ: 4843 -08 Down. SP500: 2099 -10 Up.
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