Tuesday 24 February 2015

The Real World.



Baltic Dry Index. 512 -01    Brent Crude 58.88

LIR Gold Target in 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.

Today, a dose of reality, but don’t let on to our central bankster fuelled bubble stock markets. Greece missed its Monday deadline to present its “reform” proposals to the troika, now rebranded as partners. Everyone agreed this wasn’t a problem, though I have my doubts.

With commodities collapsing lead by the price of crude oil and iron ore, the Baltic Dry Index has collapsed to all time lows. Suddenly shipping companies are starting to collapse. Major commodity exporter Australia has now joined China in the Great Global Economy Wobble.

Despite rumours, seemingly propelled by the Financial Times, of an impending OPEC oil production cut, crude oil prices resumed falling yesterday. I suspect that our world has now gone from Wobble to Recession.

Greece delays presenting reform proposals until Tuesday

Published: Feb 23, 2015 2:29 p.m. ET
ATHENS—Greece's government pushed back until early Tuesday a list of awaited reforms that its eurozone partners had demanded in exchange for continuing to fund the country for another few months.

Greek officials said late Monday that the list would be sent the following morning, past the original midnight deadline. Eurozone finance ministers are due to review the proposed reforms during a conference call Tuesday afternoon.

Although the delay isn't seen as crippling Athens's bid to seek a four-month extension of its €240 billion ($273 billion) bailout, it does show that Greece's new Syriza-led government—in power just four weeks—is struggling to address the demands of its creditors.

A European Union official said Monday that a short delay to the list wouldn't cause major difficulties, as long as the proposed measures are in line with the targets of Greece's bailout program.
More

Third dry-bulk shipper files for bankruptcy this month as rates tumble

Mon Feb 23, 2015 9:38am IST
A third dry cargo shipper has filed for bankruptcy this month following a collapse in freight rates to historic lows in what shippers call the worst market conditions since the 1980s.

South Korea's Daebo International Shipping Co Ltd filed a court receivership, a form of corporate bankruptcy, on Feb. 11, mainly due to poor dry bulk market conditions, a company official said on Monday. It is the third known bulk shipper bankruptcy this month.

Weaker demand from China and an oversupply of ships has led to the industry downturn, pushing the Baltic dry index .BADI - the industry benchmark for freight rates - to an all-time low this month. The index has slumped by nearly two-thirds in the past 15 months.

"The dry bulk market is in a really bad shape, which has hit us hard," the Daebo International official told Reuters by phone. He declined to be identified as he was not authorized to speak to media. "We did our best but we cannot help it."

 ---- Daebo International mainly provides panamax-sized dry bulk shipping services such as iron ore, coal, grains and steel products, according to its website.

South Korea is the latest major shipping country to be hit by a bankruptcy in the sector.
China's Winland Ocean Shipping Corp filed for Chapter 11 bankruptcy protection in the United States on Feb. 12, court documents show, also citing difficult market conditions.

In Denmark, privately owned Copenship filed for bankruptcy earlier in February after losses in the dry bulk market.

"The combination of lower steel demand in China and the huge volume of new tonnage coming on line is what is causing panic and making this the worst bulk market since the mid-1980s," Hsu Chih-chien, chairman of Hong Kong and Singapore-listed dry bulk shipper Courage Marine said this month.

Australian mining M&A activity slumps

23rd February 2015
Perth (miningweekly.com) – The Australian mining industry is back to the merger and acquisition (M&A) levels of ten years ago, with deal volume and value declining amid a global drop off in mining M&A activity.

In Australia, deal value amounted to $4.7-billion in 2014, down from the $5.5-billion achieved in 2013, and the lowest since 2004. Deal volumes also declined for the fourth consecutive year to 144 deals, down from the 178 in 2013 – the lowest since 2003.

EY reported in January that global deal activity declined across the sector in 2014, with the overall value falling by 49% on the 2013 figures, to $44.6-billion. Deal volumes dropped by 23% year-on-year to 544. Only 11 transactions were classified as megadeals during the year, meaning they had a value of over $1-billion.

EY Australia and Asia Pacific mining and metals transactions leader Paul Murphy said that the Australian sector could expect more divestments and forced assets sales in 2015, as well as a pick up in the pace of capital investment.

“Standing still is not an option for the sector. We expect to see mining companies continuing to review their portfolios and capital allocation with regard to growth options,” he commented in a statement.
More

BHP Billiton sees profits drop 31pc as commodity markets collapse

World's largest miner to keep tighter rein on costs in bid to protect dividend

By Telegraph staff, and agencies 11:53PM GMT 23 Feb 2015
BHP Billiton, the world’s largest miner, has suffered a 31pc drop in half-year profit, as prices for all its main products collapsed.

The results beat market forecasts but the FTSE 100 company flagged further belt tightening to withstand the tough conditions in global commodity markets.

BHP cut its target for capital spending for the year to June 2015 and said it would target savings of $4bn (£2.6bn) in the next two years, shoring up cash flows so it could stick to its policy of not cutting dividends.

“We are confident that we can maintain our progressive dividend policy and continue to selectively invest in projects that offer compelling returns,” Andrew Mackenzie, chief executive of the Anglo-Australian company, said in a statement.

Underlying attributable profit fell to $5.35bn for the six months to December 31 from $7.76bn a year earlier, ahead of analysts’ forecasts for around $5.1bn.
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Dallas Fed Manufacturing Outlook Crashes To April 2013 Lows

Tyler Durden
The Dallas Fed manufacturing outlook plunged in January - despite Richard Fisher's claims that "everything is awesome" and low oil prices are a net positive for Texas - so it is perhaps not surprising that - with a backdrop of rig count collapses and oil price lows - February's data (delivered late) plunged-er to -11.2 (against expectations of -4 - 3rd miss in a row - well below every economist's estimates). This is the lowest since April 2013. This is the fastest 3-month decline since April 2013.

Big miss... to April 2013 lows... 3rd miss in a row

----Is anyone really surprised? Except of course Richard Fisher  and his esteemed colleagues in the business community in Texas believe that the collapse in oil prices is a net positive for Texas:
"we will lose about 150,000 [oil-based] jobs, but we will pick them up elsewhere since we are a consumer society," and low oil prices is good for everyone.

Well apart from the absurdity of that statement to start with, the facts are...

Texas initial jobless claims are surging...
More

Oman Producing All-Out on Oil as Price Rout Seen Over

11:50 AM WET  February 22, 2015
(Bloomberg) -- Oman, the biggest Middle Eastern oil producer that’s not a member of OPEC, is boosting crude output to as much as possible with the global price rout over, Salim Al Aufi, undersecretary of the oil and gas ministry, said.

Oman will produce 980,000 barrels a day this year, Al Aufi said in an interview in Muscat on Sunday. That would be 4 percent higher than in 2013, according to BP Plc data. Oman will provide 2014 production figures in April, Al Aufi said.

“It’s crucial that we continue executing the future projects,” Al Aufi said. “It’s crucial that we continue the seismic activities and the exploration activities because when the market turns around, we need to have these opportunities identified and ready to go.”

Rising supply from the U.S. to Russia and slower growth in China, the world’s second-biggest oil user, are contributing to a worldwide crude surplus that Oman estimates at 1 million barrels a day. Brent crude futures have climbed 4.3 percent this year and were 42 cents lower at $59.80 a barrel on the London-based ICE Futures Europe exchange at 8:54 a.m. local time. The contract fell 48 percent last year.

“Has it bottomed?,” Al Aufi said, when asked about the oil price. “It probably did.”

Governments in the region have had to reduce subsidies on diesel, natural gas and utilities while companies cut billions from capital budgets because of low oil prices. Qatar Petroleum and Royal Dutch Shell Plc called off plans to build a $6.5 billion petrochemical plant.
More

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Ludwig von Mises.

At the Comex silver depositories Monday final figures were: Registered 68.10 Moz, Eligible 107.42 Moz, Total 175.52 Moz.  

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Today, we’re back to the usual suspects again. The banksters can resist anything except temptation.

A large Bank is exactly the place where a vain and shallow person in authority, if he be a man of gravity and method, as such men often are, may do infinite evil in no long time, and before he is detected. If he is lucky enough to begin at a time of expansion in trade, he is nearly sure not to be found out till the time of contraction has arrived, and then very large figures will be required to reckon the evil he has done.

Walter Bagehot. Lombard Street. 1873

Banks Face U.S. Manipulation Probe Over Metals Pricing

5:40 AM WET February 24, 2015
(Bloomberg) -- The U.S. Justice Department is investigating whether the world’s biggest banks manipulated prices of precious metals such as silver and gold, according to people familiar with the matter.

At least 10 banks, including Barclays Plc, JPMorgan Chase & Co., and Deutsche Bank AG are being probed by the Justice Department’s antitrust division, said one the people, who asked not to be named because the matter is confidential.

The metals investigation, which is in the early stages, broadens the Justice Department’s ongoing scrutiny of banks over manipulation of financial benchmarks. Prosecutors are conducting criminal investigations into the alleged rigging of interbank lending rates and currency markets.

HSBC Holdings Plc disclosed Monday that the Justice Department and U.S. commodities regulators have sought documents from the bank on precious-metals dealings. The bank said it is cooperating in the probes. Spokesmen for the Justice Department and the Commodity Futures Trading Commission declined to comment.

The other banks under investigation are Credit Suisse Group AG, UBS Group AG, Goldman Sachs Group Inc., Societe Generale SA, Bank of Nova Scotia, and Standard Bank Group Ltd., the person said. The Wall Street Journal reported earlier that those banks were being investigated. The banks either declined to comment or didn’t immediately respond to requests for comment.

Three banks that settled currency-manipulation claims with U.S. regulators in November -- JPMorgan, Citigroup Inc. and Bank of America Corp. -- were required under terms of those agreements to review and identify “other trading activities that could raise similar market conduct issues.” Those reviews triggered scrutiny of precious metals trading, another person familiar with the matter said.

Fixings, price-setting rituals dating back a century for gold, silver, platinum and palladium, are being overhauled as scrutiny increases over how market benchmarks are set. Switzerland’s regulator said in November that it found “serious misconduct” by UBS employees in precious metals trading. Barclays was fined in May by the Financial Conduct Authority after a trader sought to influence the gold fix in 2012.

HSBC, Barclays and Deutsche Bank are among banks that have been sued in the U.S. over claims they conspired to manipulate precious metals prices for years.

London-based HSBC also is under a five-year deferred prosecution agreement with the Justice Department from a previous money-laundering settlement. The agreement requires the bank to cooperate in other probes.

“The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost…We conclude that under a paper-money system, a determined government can always generate higher spending and hence positive inflation.”

Dr. Ben Bernanke. 2002  We are about to find out.

The monthly Coppock Indicators finished January

DJIA: +124 Down. NASDAQ: +220 Down. SP500: +178 Down.  

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