Baltic Dry Index. 847 +04
LIR Gold Target by 2019: $30,000. Revised due to QE programs.
“The
boom can last only as long as the credit expansion progresses at an
ever-accelerated pace. The boom comes to an end as soon as additional
quantities of fiduciary media are no longer thrown upon the loan market.”
Ludwig Von Mises
For more on the changing shape of shipping with the
2013 arrival of the “Triple E” behemoth container ships, scroll down to Crooks’
Corner. With no ports in the America’s
north or south able to handle them, at first they will just run from Asia to
Europe.
We open today with the “Great Disconnect” going
mainstream. As all the Fed’s QE Forever programs hold down US bond interest
rates and forces “free cash” into stocks, the underlying global economy has
become more iffy than ever. Will sanity
return to the world? Will we get an Italian back in the Papacy and German to
run the ECB? More likely is a 2013 stock market crash, as the megalomaniac European
Bilderberger project collapses in anarchy and animosity. To get the EMU through
2013, the world needs something of a miracle. Stay long physical precious
metals. God has probably better uses for his miracles.
"The most puzzling development in politics during the last decade is the apparent determination of Western European leaders to re-create the Soviet Union in Western Europe."
Mikhail Gorbachev
Sputtering global economy belies stockmarket boom
Asia's economic recovery is losing momentum and Europe's slump is proving deeper than expected, raising concerns that soaring stock markets globally have jumped ahead of economic reality.
Japan's
closely-watched index for machinery orders fell 13pc in January, nearing levels
last seen after the Lehman Brothers crisis. "It is a shockingly poor
number and illustrates the divergence between the improvement in sentiment in
financial markets and what is actually happening on the ground," said
Julian Jessop from Capital Economics.
China's
industrial output rose 0.6pc in January and 0.8pc in February, the slowest pace
since early last year. Retail sales growth dropped to 12.3pc, the weakest since
early 2004. "The goal of consumer-led growth remains a pipe dream for
now," said the group's China economist, Qinwei Wang. "The economic
rebound may already be stalling."
The US
economy is holding up, as cheap shale gas drives a manufacturing revival, but
Charles Dumas from Lombard Street Research said America still has to navigate
the most drastic fiscal squeeze since the Second World War. "We think
tightening will be 2.5pc of GDP this year and that will hit profits," he
said. "We expect a 10-20pc correction in the S&P 500."
While
the US unemployment rate dropped to 7.7pc in February – the lowest
since 2008 – this was entirely due to a fall in the "participation
rate" to a fresh low of 63.5pc, as people dropped off the rolls. Jobs
figures are a lagging indicator in any case. Commodities can be a better gauge
and they are flashing amber, refusing to confirm that a fresh cycle of global
expansion is fully under way.
The Baltic
Dry Index, measuring freight rates for bulk goods, is at 2009 lows and the CRB
commodities index has been slipping since September. Copper futures have fallen
10pc over the past month and "Dr Copper" is famously prescient.
----Europe remains the world's economic black hole. Data on Monday showed a 1.2pc decline in French industrial output in January, weaker than expected. French real M1 money aggregates have fallen at an annual rate of 7pc over the past six months, pointing to a sharp downturn.
European
Central Bank chief Mario Draghi says small firms still face a credit crunch
across large parts of the currency bloc and warned that "hard"
economic facts had yet to validate "soft" surveys.
The bank
is sticking to its tight money stance for now, though "doves" pushed
for a rate cut last week. Former board member Lorenzo Bini-Smaghi said the ECB
may have to cut rates unless there is evidence of real recovery soon.
"Growth is not picking up," he told Bloomberg.
More
http://www.telegraph.co.uk/finance/globalbusiness/9923506/Sputtering-global-economy-belies-stockmarket-boom.html
Jean-Claude Juncker Interview: 'The Demons Haven't Been Banished'
In an interview, Luxembourg prime minister and former Euro Group chief Jean-Claude Juncker, 58, urges other EU countries to push ahead with structural reforms, explains why he sees parallels between 2013 and the year preceeding World War I and throws his election support behind Angela Merkel's re-election campaign.
----SPIEGEL: For eight years, you were a kind of informal president of the monetary union. When you take stock of your accomplishments during this period, don't you have to admit that Europe has tended to drift apart rather than become more close-knit?
Juncker: For my generation, the monetary
union has always been about forging peace. Today, I notice with a certain sense
of regret that far too many Europeans are returning to a regional and national
mindset.
SPIEGEL: What do you mean by that?
Juncker: The way some German politicians
have lashed out at Greece when the country fell into the crisis has left deep
wounds there. I was just as shocked by the banners of protesters in Athens that
showed the German chancellor in a Nazi uniform. Sentiments suddenly surfaced
that we thought had been finally relegated to the past. The Italian election
was also excessively anti-German and thus un-European.
SPIEGEL: You're exaggerating. No one today
seriously doubts peace and friendship in Europe.
Juncker: That's true. But anyone who
believes that the eternal issue of war and peace in Europe has been permanently
laid to rest could be making a monumental error. The demons haven't been
banished; they are merely sleeping, as the wars in Bosnia and Kosovo have shown
us. I am chilled by the realization of how similar circumstances in Europe in
2013 are to those of 100 years ago.
SPIEGEL: 1913 was the year before the
outbreak of World War I. Do you seriously believe that there will be armed
conflict in Europe?
Juncker: No, but I see obvious parallels
with regard to people's complacency. In 1913, many people believed that they
would never again be a war in Europe. The great powers of the Continent were
economically so strongly intermeshed that there was the widespread opinion that
they could simply no longer afford to engage in military conflicts. Primarily
in Western and Northern Europe, there was a complete sense of complacency based
on the assumption that peace had been secured forever.
----SPIEGEL: Following the recent election in Italy, it's clear that the people of Southern Europe don't approve of your reform initiatives. Doesn't this worry you?
Juncker: The results of the Italian
election are widely interpreted as an across-the-board rejection of the euro,
but there are also other factors at work here. Beppe Grillo has primarily made
a name for himself as a critic of his country's political class, while Silvio
Berlusconi has promised to lower taxes. By contrast, the party that ran the
most vehemently anti-euro campaign, the Lega Nord, lost many of its voters.
Consequently, I don't see the Italian election result as primarily a vote
against the euro and the European reform policy.
SPIEGEL: You always have an amazing
ability to sugar coat the European plight. The reality is that the big loser of
the election was outgoing Italian Prime Minister Mario Monti, whose
Europe-friendly course was soundly rejected. Does that spell the end of the
reform policy in Italy?
Juncker: That would be a serious mistake.
The consequence of the Italian election result cannot be that we suddenly
return to the policies that caused this mess. It is not possible to combat the
financial and economic crisis by saddling an already heavily indebted state
with new debts. There is no getting around a solid budgetary policy.
SPIEGEL: In other words, Italian
politicians should pursue a policy that the majority of the population does not
support.
Juncker: I'm going to make a bold
statement: One shouldn't pursue the wrong policies just because one is afraid
of not being reelected. Those who intend to govern have to take responsibility
for their countries and for Europe as a whole. This means, if need be, that
they have to pursue the right policies, even if many voters think they are the
wrong ones.
More
http://www.spiegel.de/international/europe/spiegel-interview-with-luxembourg-prime-minister-juncker-a-888021.html
Ships Reject Unprofitable Cargo to Halt Slump in Rates: Freight
By Isaac Arnsdorf - Mar 12, 2013 12:01 AM GMT
The worst
start to a year for freight rates is leading one of the creators of shipping
derivatives to bet on a recovery as owners of vessels carrying coal, iron ore
and grains turn away cargoes.
The
Baltic Dry Index averaged 767 since Jan. 1, the lowest since at least 1985,
according to the Baltic Exchange in London. Rates for all vessels in the gauge
are unprofitable, data compiled by Pareto Securities A/S in Oslo show.
Investors should bet on a rebound by buying freight swaps, said Philippe Van
Den Abeele, the managing director of Castalia Fund Management (U.K.) Ltd. and
one of the creators of the derivatives market in shipping two decades ago.
“Owners
are saying no to unprofitable cargoes,” said Peter Sand, a Bagsvaerd,
Denmark-based analyst at the Baltic and International Maritime Council, the
trade group whose members control 65 percent of the global merchant fleet.
“It’s impossible to run a profitable business at these levels. There is some
kind of limit where even owners desperate to relocate or reposition their ships
will not go so low.”
Rates
plunged 93 percent since peaking in 2008 after owners ordered too many vessels
just as the global economy entered its worst recession since World War II. The
fleet will expand faster than demand for a sixth year in 2013, according to
Clarkson Plc, the world’s largest shipbroker. All 12 members of the Bloomberg
Dry Ships Index most recently reported annual losses or declining profit.
----Capesizes, the largest vessels in the Baltic Dry Index, earned an average of $6,358 a day this year, according to the Baltic Exchange, which reports rates on more than 50 maritime routes. The ships need $7,758 to cover running costs, rising to about $16,000 once debt repayments are included, according to Moore Stephens LLP, a London-based accountant that tracks the industry’s expenses, and Pareto.
More
http://www.bloomberg.com/news/2013-03-12/ships-reject-unprofitable-cargo-to-halt-slump-in-rates-freight.html
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar.
At the Comex silver depositories Monday final figures were: Registered 41.98
Moz, Eligible 120.24 Moz, Total 162.22 Moz.
Crooks and
Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks today,
just an update on the changing shape of shipping. Europe gets set to welcome
the “triple E” container ships. But what will Europe have to fill them with
when they make the return trip back to China? All three articles are well worth the read in their entirety.
Size matters as Triple E container ships sail for Europe
At 400 metres long and with
18,000-container capacity, vessels have triggered scramble to build or adapt
ports to accommodate
Wednesday 6 March 2013 17.46 GMT
A fleet of behemoths are on their way to Europe, container ships so large – almost a quarter-mile long, wider than a motorway and taller than a 20-storey office block– that ports are having to undergo radical surgery in order to accommodate them.
The new Triple E ships, which will come into service this summer, will be able to carry 18,000 6.1-metre (20ft) containers, known as TEUs – three times as many as the biggest container ships 15 years ago.
When US businessman Malcolm McLean invented the idea of carrying goods in metal boxes in the 1950s his first vessel, a converted second world war oil tanker the Ideal X, carried just 58 containers.
Today, if all the containers on a Triple E were stacked on top of each other they would touch the stratosphere – 29 miles above the earth. If they were unloaded on to a single train it would need to be 68 miles long. Inside, you could squeeze in 36,000 cars.
Because they're so vast the Triple Es – which stands for economy of scale, energy efficiency and environmentally improved – will be able to move goods more cheaply and efficiently than current ships. But, they will be far too big for most of the world's ports.
No port in North or South America is currently able to take the vessels, nor the Panama canal locks – designed for the last generation of container ships – which are due to open next year. The Triple Es will just about squeeze through the Suez canal, and will ply only the China to Europe route, bringing in goods and returning with cargoes of scrap metal and plastic waste for recycling – but mostly empty.
Only a handful of European ports, including Felixstowe and Southampton in the UK, are equipped to handle the behemoths. Those that cannot are investing hundreds of millions to make sure they can.
The UK is building a £1.5bn port 20 miles east of London's original ports. London Gateway, which is being bankrolled by Dubai's DP World, has just installed the first of 24 138-metre high cranes designed specifically to reach up and across the Triple Es' vast deck of containers.
London Gateway, which is due to open before the end of the year, is Britain's biggest construction project after Crossrail, employing 2,500 workers. The government hopes the port will support 36,000 jobs.
More
Maersk Line to Dump Panama Canal for Suez as Ships Get Bigger
By Kyunghee Park - Mar 11, 2013 8:00 PM GMT
Maersk
Line, the world’s biggest container shipping company, will stop using the Panama Canal to
transport goods from Asia
to the U.S. East Coast as bigger ships help the company move them profitably
through Suez
Canal. Maersk Line will send through Suez Canal a vessel that can carry as many as 9,000 20-foot boxes at a time, instead of using two 4,500-box-vessels through Panama Canal, Soeren Skou, chief executive officer, said in Singapore yesterday. The last sailing through Panama will be on April 7 and the first service through Suez will be a week later, the company said in an e-mail.
“The economics are much, much better via the Suez Canal simply because you have half the number of ships,” Skou said. “One of the reasons for why this is happening now is that the cost for passing through the Panama Canal has gone up. At the end of the day, it comes down to cost.”
Shipping companies, including Maersk Line and Neptune Orient Lines Ltd. (NOL),
have cut costs, reduced speed of their fleet and sold some vessels to contend
with freight rates that are below break-even levels. Copenhagen, Denmark-based
Maersk Line, which is taking delivery in June of an 18,000 TEU vessel -- the
world’s biggest when it enters service -- has said pressure on charges will
remain this year.
More
The Triple-E Maersk container ship will be the world's largest ship and the most efficient
By Jack Martin February 21, 2011
Korea's Daewoo
is to build the world's largest ship for Mærsk line. The US$190 million, 400
meter 'Triple-E' class behemoths will carry 18,000 TEU containers, 2500 more
than the current largest, Emma Mærsk. Superior economies of scale will enable
the new monsters to surpass the industry record for both fuel efficiency and
(20% better) CO2 emissions per container moved. In a move set to impact global
shipping transport costs and efficiencies, ten Triple-E ships will go into
service between 2013 and 2015 with a further 20 ships optioned. If the same
number of containers were loaded on a train, it would be 110 km long. If they
were stacked on top of one another, they'd reach beyond the stratosphere (47
km).
The
vessel's enormous capacity will enable Maersk Line to move the greatest number
of containers possible for its customers in the most energy efficient way and
with the smallest CO2 footprint.
The
Triple-E isn't just the largest vessel of any kind in operation today: it is
actually the longest and widest container vessel possible based on port
restrictions. And the reality is that the visible dimensions of the ship–only
four meters longer and three meters wider than Emma Mærsk, the world's largest
vessel in operation – do not fully convey its size.
The Triple-E's
enormity is actually in its bulk. Through feats of engineering, the Triple-E's
vastly expanded inside cavity gives it a capacity 16 percent greater than Emma
(equivalent to 2,500 containers), despite relatively little change in the
length and width.
Unlike
Emma Mærsk's more typical V-shaped hull which limits container capacity towards
the bottom of the 'V' in the cargo holds, the hull of the Triple-E is more like
a U-shape. An additional row of containers was added to the Triple-E as well,
giving it 23 rows across its width, compared to Emma's 22. The more spacious
hull and extra row provides additional capacity for 1,500 containers.
Additional
container space has been created in the vessel by moving the navigation bridge
and accommodation 5 bays forward and the engine room and chimney 6 bays back in
what is called a 'two-island' design. With the more forward navigation bridge,
containers can be stacked higher in front of the bridge (approximately 250
more) without losing visibility. And approximately 750 more containers fill the
space behind the bridge above deck and below deck using the space created by
the engine room's position further to the back of the vessel.
At 400
metres long the Triple-E ships on order by Maersk Line are larger than any
vessel of any kind currently on the water. Its capacity of 18,000 TEU is a
significant increase of the current 15,500 TEU capacity record held by the Emma
Mærsk class
More
"Until government administrators can so identify the interests of government with those of the people and refrain from defrauding the masses through the device of currency depreciation for the sake of remaining in office, the wiser ones will prefer to keep as much of their wealth in the most stable and marketable forms possible - forms which only the precious metals provide."
Elgin Groseclose
The monthly Coppock Indicators finished February:
DJIA: +111 Up. NASDAQ: +129 Up. SP500: +148 Up. All three indexes are giving the same signal since
January, up, but surprisingly February’s
move in all three was weak, suggesting that the indicators are topping
out. Will sequestration turn March into a
down month? So far so good.
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