Baltic Dry Index. 1079 -40 Brent Crude 70.27
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
In
casting up this dread balance-sheet, contemplating our dangers with a
disillusioned eye, I see great reason for intense vigilance and exertion, but
none whatever for panic or despair.
British Chancellor “Ozzie” Osborne, with apologies
to WSC.
Today we take a bad trip down
the UK’s forgotten Memory Lane, but first this.
Hindenburg Omen cries bear market, again
Published: Dec 3, 2014 3:15 p.m. ET
The Hindenburg Omen, which is supposed to warn of an impending stock market
crash, is crying wolf—or bear market, in this case -- but investors don’t seem
to care.And why should they? The bulk of the previous sightings of the infamous technical indicator, which was created by the late Jim Miekka, have failed to lead to any weakness at all, much less a bear market.
A new Hindenburg Omen appeared after the market closed on Tuesday, according to Tom McClellan, who writes the investment newsletter McClellan Market Report. Meanwhile, the Dow Jones Industrial Average DJIA, +0.18% edged higher in afternoon trading on Wednesday. The benchmark was on track to close at an all-time high for the 33rd time this year, despite multiple Hindenburg Omen appearances over the last 12 months.
As chart above shows, each significant selloff over the past 30 years was preceded by the appearance of Hindenburg Omen.
“There are far more Hindenburg signals than there are scary declines,” McClellan said. “But it has a pretty good track record of appearing ahead of the major price declines.”
Miekka once likened his indicator to a funnel cloud -- they don’t always become devastating tornadoes, but that doesn’t mean investors shouldn’t take cover.
“We don’t think this particular instance of a Hindenburg Omen is going to turn into a big selloff,” McClellan said, given the market is entering the strongest period of seasonality.
Basically, investors who ignore the Hindenburg Omen’s latest warning will probably be right to do so. But at some point, the law of averages will catch up to them.
Below, with typical British understatement and modesty, Her Majesty’s
Government, “in a moment for Britain to be proud of,” and as “ a sign of our
fiscal credibility,” with stiff upper lip and all, intends to pay off next
March, the last of Britain’s World War One war debt. With unintended deadpan humour, H. M.s
Treasury continued, it also intends to pay off the last of HMG’s “South Sea”
bubble debt from 1720. Better late than never I suppose. I wonder if Barclays
will give me terms to 2315?
Below, yet another sign of the top? Is the Great Nixonian Error of Fiat
money, great or what?
Let
us therefore brace ourselves to our duties, and so bear ourselves that, if the
British Empire and its Commonwealth last for a thousand years, men will say,
"This was my finest hour."
British Chancellor “Ozzie” Osborne, with apologies
to WSC.
UK government to pay back all World War One debt
George Osborne wants to take advantage of today's low interest rates to pay off all undated gilts in the Government's portfolio
Nearly one hundred years after it
was first issued, the UK Government has announced that it will repay all of the
nation's World War One debt.
In October, the government said
that it would redeem £218m of so-called "4pc Consols" - bonds that
were first issued by then Chancellor Winston Churchill in 1927, partly to
refinance National War Bonds originating from the First World War. This was the
first planned repayment of an undated gilt of this kind by the UK Government
for 67 years.
Today's news extends the repurchasing
programme to include all of the debt that the UK incurred during the Great War.
Mr Osborne said: “This is a
moment for Britain to be proud of. We can, at last, pay off the debts Britain
incurred to fight the First World War. It is a sign of our fiscal credibility
and it’s a good deal for this generation of taxpayers. It’s also another
fitting way to remember that extraordinary sacrifice of the past."
----In a statement, the Treasury said: "Today’s announcement also represents the start of a strategy to remove all six of the other remaining undated gilts in the Government’s portfolio, when we deem it value for money to do so. This will take advantage of the low yield environment to consolidate the debt portfolio and deliver a long-term advantage of the tax payer."
The Treasury said that these
gilts include some debt originally issued in the era of the South Sea bubble in
the 18th century, as well as to fund the nationalisation of the Bank of
England.
More
Market Crashes: The South Sea Bubble
Synopsis: In the 1700s,
the British empire was the big dog on the block, and that particular block
spanned the entire globe. For the British, the eighteenth century was a time of
prosperity and opulence, meaning a large section of the population had money to
invest and were looking for places to put their money. So, the South Sea
Company had no problem attracting investors when, with an IOU to the government
worth £10,000,000.00, the company purchased the "rights" to all trade
in the South Seas.
The few companies offering stock at that time were all solid but difficult investments to buy. For example, the East India Company was paying out considerable tax-free dividends to their mere 499 investors. The SSC was perched on top of what was perceived to be the most lucrative monopoly on earth.
The first issue of stock didn't even satiate the voracious appetite of the hardcore speculators, let alone the average investors who were assured of this company's coming dominance. The popular conception was that Mexicans and South Americans were just waiting for someone to introduce them to the finery of wool and fleece in exchange for mounds of jewels and gold! So nobody questioned the repeated re-issues of stocks by the South Sea Company--people just bought the expensive stocks as fast as they were offered. It didn't matter either to investors that the company wasn't headed by experienced management. Those who lead the company, however, were born public relations directors, who set up offices furnished with affluence in the most extravagant quarters. People, once they saw the wealth the SSC was "generating," couldn't keep their money from gravitating towards the SSC.
The few companies offering stock at that time were all solid but difficult investments to buy. For example, the East India Company was paying out considerable tax-free dividends to their mere 499 investors. The SSC was perched on top of what was perceived to be the most lucrative monopoly on earth.
The first issue of stock didn't even satiate the voracious appetite of the hardcore speculators, let alone the average investors who were assured of this company's coming dominance. The popular conception was that Mexicans and South Americans were just waiting for someone to introduce them to the finery of wool and fleece in exchange for mounds of jewels and gold! So nobody questioned the repeated re-issues of stocks by the South Sea Company--people just bought the expensive stocks as fast as they were offered. It didn't matter either to investors that the company wasn't headed by experienced management. Those who lead the company, however, were born public relations directors, who set up offices furnished with affluence in the most extravagant quarters. People, once they saw the wealth the SSC was "generating," couldn't keep their money from gravitating towards the SSC.
Not
long after the emergence of the SSC, another British company, the Mississippi
Company, established itself in France. The company was the brainchild of an
exiled Brit named John Law. His idea wasn't so much based in trade, but in
switching the monetary system from gold and silver into a paper currency
system. The Mississippi Company caught the attention of all the continental
traders and gave them a space to put their hard-earned dollars. Soon the worth
of the Mississippi Company's stock was worth 80 times more than all the gold
and silver in France. Law also began collecting defunct companies to add to his
massive conglomerate.
This
success on the continent stirred British pride, and, believing that British
companies could not fail, British investors were desperate to invest their
money. They were blind to many indications that the SSC was run too poorly to
break even (whole shipments of wool were misdirected and left decaying in
foreign ports), and people wanted to buy even more stocks. The South Sea
Company and others made a point of giving people what they wanted. The demand
for investments caused IPOs to sprout out of everything,
including companies that promised to reclaim sunshine from vegetables and to
build floating mansions to extend Britain's landmass. They all sold like mad.
Eventually
the management team of SSC took a step back and realized that the value of
their personal shares in no way reflected the actual value of the company or
its dismal earnings. So they sold their stocks in the summer of 1720 and hoped
no one would leak the failure of the company to the other shareholders. Like
all bad news, however, the knowledge of the actions of SSC management spread,
and the panic selling of worthless certificates ensued. The huge hole in the
south sea bubble also punctured the Mississippi Company's unrealistic value and
both came crashing down.
More
The aftermath.
"a company for carrying out an undertaking of great advantage, but nobody to know what it is".
The South Sea Bubble 1720
Bubble Act
Bubble
Act 1720
(6 Geo I, c 18) was an Act of the Parliament of Great Britain that forbade
all joint-stock
companies
not authorised by royal
charter.
It was passed on 9 June 1720, and was also known as the Royal Exchange and
London Assurance Corporation Act 1719, because those companies were
incorporated under it.
Various
motivations have been suggested for the Act. These include the desire to
prevent speculation such as that which produced the contemporary South Sea Bubble; an attempt to
prevent smaller non-charter from forming and so reduce the importance of
Parliament in regulating businesses; or that the South Sea
Company
itself wanted to prevent other bubbles from forming that might have decreased
the intensity of its own.[1] Recent
scholarship indicates that the last of these was the cause: it was passed to
prevent other companies from competing with the South Sea Company for
investors' capital.[1][2] In fact, the
Act was passed in June 1720, before the peak of the bubble. The Act was
repealed in 1825
More
"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."
Hans F. Sennholz
At the Comex silver
depositories Wednesday final figures were: Registered 64.51 Moz, Eligible 112.25
Moz, Total 176.76 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Starting question. When does a Pole
called rod, become a fish?
Today, it’s
an old trick, but it just might work. But where can we find 000s of unsold
Isuzus?
How to balance the budget Uncle Scam style.
In oil news, lookout below.
Sub-$50 Oil Surfaces in North Dakota Amid Regional Discounts
Dec 4, 2014 4:39 AM GMT
Oil market analysts are debating if oil will fall to $50. In North Dakota,
prices are already there. Crude sold at the wellhead in the Bakken shale region in North Dakota fell to $49.69 a barrel on Nov. 28, according to the marketing arm of Plains All American (PAA) Pipeline LP. That’s down 47 percent from this year’s peak in June, and 29 percent less than the $70.15 paid for Brent, the global benchmark.
The cheaper price for North Dakota crude underscores how geographic and logistical hurdles can amplify the stress that plunging futures prices have put on drillers in new shale plays that have helped push U.S. oil production to the highest level in 31 years. Other booming areas such as the Niobrara in Colorado and the Permian in Texas have also seen large discounts to Brent and U.S. benchmark West Texas Intermediate.
“You have gathering fees, trucking, terminaling, pipeline and rail fees,” Andy Lipow, president of Lipow Oil Associates LLC in Houston, said Dec. 2. “If you’re selling at the wellhead, you’re getting a very low number relative to WTI.”
Discounted prices at the wellhead have been exacerbated by a 39 percent drop in Brent futures since June 19 to $69.92 a barrel yesterday. Prices have fallen as global demand growth fails to keep pace with surging oil production from the U.S. and Canada.
Much of that new output is coming from areas that are facing steep discounts. Bakken crude was posted at $50.44 a barrel Dec. 2. Crude from Colorado’s Niobrara shale was priced at $54.55, according to Plains. Eagle Ford crude cost $63.25, and oil from the Oklahoma panhandle was $58.25.
Discounts for all crudes are based on two things, location and quality, according to John Auers, executive vice president at Dallas-based energy consulting firm Turner Mason & Co.
Most U.S. refiners are along the coasts, which gives them a choice between oil pumped from wells in the middle of the country or foreign crude that can be delivered to the plant on a tanker.
That means the producer has to charge less, to make up for whatever it costs to transport it to the plant. In the Eagle Ford, that just means a few dollars to get to a pipeline that can cheaply push it 100 miles or so to Corpus Christi, Texas.
It’s more complicated in places like North Dakota, Colorado or Wyoming, where there is limited pipeline capacity. Producers have to fill rail cars with crude and pay $10 to $15 a barrel for them to be pulled a thousand miles or more to the coasts.
----“To a producer in Wyoming, if Brent’s $70 then I’m at $50, then I have to start asking does it economically make sense to keep drilling,” Auers said yesterday. “They might start reallocating capital, you might see projects slowed or shut down.”
More
http://www.bloomberg.com/news/2014-12-03/sub-50-oil-surfaces-in-north-dakota-as-regional-discounts-swell.html
"We need only take our heads out of the sand to see clearly that interventionism not only has failed to provide the promised something-for-nothing, but has led to all sorts of undesirable consequences. Indeed, many are just beginning to realize that we are moving towards disaster even though we have been on a wrong heading for decades."
Leonard Read
Bonus question for today. When do three hands equal a foot?
The monthly Coppock Indicators finished November.
DJIA: +136 Down. NASDAQ: +262 Down. SP500: +204 Down.
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