Friday 17 April 2015

China’s “Great Army of Stock Investors.”



Baltic Dry Index. 593 +07       Brent Crude 63.44

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

A system of capitalism presumes sound money, not fiat money manipulated by a central bank. Capitalism cherishes voluntary contracts and interest rates that are determined by savings, not credit creation by a central bank.

Ron Paul

For more on China’s “Great Army,” scroll down to this section’s last article. But what happens when China’s new bubble ends the Greenspan way?

With all of the central bankster crooks in Washington this weekend for the IMF – World Bank junket, together with their fixits, groupies and water carriers, it really is the last chance for Greece to pull a white rabbit out of a very black hat. While the IMF seemed toying yesterday with some sort of compromise with Greece, there was no sign of the EUSSR willing to go along. By the end of the day the IMF’s Great Leader seems to have changed her mind. If no white rabbit this weekend, does the Greek fox get shot in Riga on April 24th? Is this any way to be running fiat money?

Bad money drives out good.

Thomas Gresham. Gresham’s Law.

Grexit dangers mount as Greece's Yanis Varoufakis warns of 'liquidity asphyxiation'

The Greek finance minister said his country would not continue deception of 'Ponzi austerity' even if this means a showdown with creditors

Greek finance minister Yanis Varoufakis has acknowledged that his country is desperately short of funds, accusing Europe's creditor powers of trying to force his country to its knees by "liquidity asphyxiation".

"Liquidity is drying up in Greece. It is true," he told a gathering at the Brookings Institution in Washington.

Mr Varoufakis said a conspiracy of forces was trying to "snuff out" Greece's Syriza government but warned that this could have devastating effects.

"Toying with Grexit, or amputating Greece, is profoundly anti-European. Anybody who says they know what will happen if Greece is pushed out of the euro is deluded," he said.

The warnings were echoed by Eric Rosengren, head of the Boston Federal Reserve, who said Europe risks sitting off uncontrollable contagion if it mishandles the Greek crisis, even though Greece may look too small to matter.

"I would say to some European analysts who assume that a Greek exit would not be a problem, people thought that Lehman wouldn't be a problem. If you measured the size of Lehman relative to the size of the US economy it was quite small," he told a group at Chatham House.

"I wouldn't be overly confident that just because the Greek economy is small relative to the size of the European economy that something like that wouldn't be a major dislocation. I think everybody should be a little bit concerned," he said.

Christine Lagarde, the head of the International Monetary Fund, said the IMF is worried about the "liquidity situation" in Greece but made it clear that the institution would not give the country any leeway on €1bn of debt repayments coming due in early May.

"We have never had an advanced economy asking for payment delays. It is clearly not a course of action that would be fit or recommended," she said. Mrs Lagarde insisted that the the Fund would defend the interests of its contributors, many of them much poorer countries than Greece.

Mr Varoufakis said the European Central Bank and the EMU authorities were deliberately tightening the tourniquet on Greece until the arm was "gangrenous" in order to pressure his Syriza government to give in.

"I would willingly, eagerly, accept any terms offered to us if they made sense. Insisting on a primary budget surplus of 4.5pc in a depressed economy with no functioning banking system is absurd. We have the right to challenge the logic of a programme that has failed," he said.

He was speaking before a reception to celebrate Greek independence at the White House. It is understood that he spoke privately with President Barack Obama, though not at the Oval Office.

Wolfgang Schauble, Germany's finance minister, said it is up to Greece to decide its own fate. "If they want to find money somewhere else, whether in Moscow, or Beijing, or New York, that's fine, we'll be happy," he said.

Thu Apr 16, 2015 10:59pm EDT

Brent crude oil prices fall as OPEC production soars

(Reuters) - Brent crude oil prices fell over a dollar on Friday, ending a run of rallies earlier in the week, after OPEC said that its output surged in March, adding to a global glut.

The Organization of the Petroleum Exporting Countries (OPEC) said that its March production jumped 810,000 barrels per day (bpd), to 30.79 bpd which is equivalent to a third of global supply.
Front-month Brent crude futures LCOc1 were down a dollar, or 1.6 percent, at $62.98 per barrel at 10.25 p.m. EDT on Friday. U.S. crude CLc1 was down 81 cents at $55.90 a barrel.

Reuters technical analyst Wang Tao said that Brent could fall further to slightly above $61.20 a barrel before finding market support.

Dipping output from the United States and other rival producers due to oil prices halving since June last year, increased demand for OPEC's supplies, the organization said.

"The strategy of OPEC to put pressure on the high-cost producers is working, but the individual members seem to have moved off that focus and are instead producing as much as they can," said Jamie Webster, analyst at IHS in Washington and an OPEC expert.

OPEC's report may reinforce the perception that major producers are staking out market share ahead of a potential rise in Iranian exports following its framework accord with world powers over its nuclear program.

Friday's price fall at least temporarily ended a rally that has seen Brent gain over 16 percent in value since the beginning of the month, triggered by Middle East conflict and a dip in U.S. oil production.

China bets $46 billion on Pakistan trade route

Published: Apr 17, 2015 12:30 a.m. ET
Chinese President Xi Jinping is set to unveil a $46 billion infrastructure spending plan in Pakistan that is a centerpiece of Beijing’s ambitions to open new trade and transport routes across Asia and challenge the U.S. as the dominant regional power.

The plan, known as the China Pakistan Economic Corridor, draws on a newly expansive Chinese foreign policy and pressing economic and security concerns at home for Mr. Xi, who is expected to arrive in Pakistan on Monday. Many details had yet to be announced publicly.

“This is going to be a game-changer for Pakistan,” said Ahsan Iqbal, Pakistan’s planning minister, who said his country could link China with markets in Central Asia and South Asia.

“If we become the bridge between these three engines of growth, we will be able to carve out a large economic bloc of about 3 billion living in this part of the world…nearly half the planet.

‘Beijing put’ may be driving China’s stock-market fever

Published: Apr 16, 2015 10:35 p.m. ET

The Shanghai market has doubled in value over the past 10 months — and many observers believe the government is behind it

HONG KONG (MarketWatch) — China’s stock markets are climbing to feverish heights as a record number of ordinary Chinese, including teenagers, flood into equities.

But in the eyes of many, the share-buying frenzy and wild bull market are all due to one thing: The Chinese government wants it that way.

Like the “Greenspan put” of the dot-com era, in which U.S. investors believed then Federal Reserve chairman Alan Greenspan was backstopping the market, Shanghai now seems to be surging on the belief in a “Beijing put.”

Although emerging markets have been doing quite well recently — the MSCI EM Index 891800, +1.14%  has risen by more than 10% so far this year — the surge in China markets is particularly prominent.

By the close of Thursday trade, the benchmark Shanghai Composite Index SHCOMP, +1.97%  was up 30% year-to-date, and it has more than doubled in just the past 10 months.

The boom has also spilled over to the nearby Hong Kong equity market, where the city’s benchmark Hang Seng Index HSI, +0.23%  has surged nearly 18% since the start of January, while the mainland-China-tracking Hang Seng China Enterprises Index HSCEI, +0.03%  has climbed by 22% over the same period.

Emboldened by the astounding advance, an increasing number of ordinary Chinese have joined what the state-run China News Service has called the “great army of stock investors,” lining up outside of brokerage firms to open new trading accounts.

The sharp increase in new investors and market volume has even caused system breakdowns for China Securities Depository and Clearing Corp. (CSDC) — the national clearing house — as well as individual securities firms.

Statistics from CSDC show that last week the number of new stock-trading accounts opened hit a fresh all-time high of 1.68 million, beating the previous 1.67 million recorded for the week of March 27. In only the past month, mainland Chinese investors opened more than 6 million such accounts, according to the data.

The CSDC said that this “steep rise” in new stock-account applications left it unable for a while on Tuesday to handle the barrage of requests, while Haitong Securities 6837, +0.20% 600837, +0.22% the second-largest securities firm in the country, also encountered “a system breakdown” the same day, according to a report in the Beijing Youth Daily.

At the same time, the explosive growth in demand has caused brokerages to boost their margin lending, with Haitong Securities and fellow financial heavyweight China Merchants Securities 600999, -1.00%  announcing earlier this week that they would increase their margin quotas for investors.

According to analysts, this dramatic performance for China’s stock markets is due in large part to the belief that the government is supporting the gains.

In a note to clients Wednesday, Capital Economics markets economist Kevin Ferriter said the most important factor behind the China bull market was the impression policy makers have given to investors that “they will aim to keep equity prices high.”

A note the following day from Ferriter’s CapEcon colleague Mark Williams added that the steep gains were a result of sentiment rather than any improvement in underlying economic conditions.

The view from within China is similar, with analysts from Guangzhou Securities saying in a report earlier this week that investors are currently “strategically going long” in local equities because “state will” has strongly intervened in the situation.
More

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

J. K. Galbraith.

At the Comex silver depositories Thursday final figures were: Registered 62.97 Moz, Eligible 111.85 Moz, Total 174.82 Moz.  

Crooks and Scoundrels Corner

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

Today, welcome to Europe’s governing elite. Austerity and euro wealth destruction for the serfs, life high on the hog for the elite. Euros anyone?

“Only the little people and little companies pay taxes.”

Jean Claude Juncker with apologies to Leona Helmsley.

Former IMF Chief Rato Faces Spain Money Laundering Probe

4:03 PM BST April 16, 2015
Rodrigo Rato, the former head of the International Monetary Fund and deputy prime minister of Spain, was detained by customs agents in Madrid on Thursday night as the tide of corruption allegations swamping the country’s political establishment reached a fresh high.

Rato, 66, is being investigated for possible money laundering after he took advantage of a 2012 tax amnesty to repatriate previously undeclared offshore funds, Justice Minister Rafael Catala said earlier on Thursday. After a court ordered a search of his home in the exclusive neighborhood of Salamanca in downtown Madrid, Rato was led to a car wearing a dark blazer and driven away by agents shortly after 8 p.m.

“This will be the image the people remember from the crisis,” Jose Carlos Diez, an economics professor at the University of Alcala, said in a telephone interview. “This is the iconic moment that marks the end of a cycle.”

Rato’s lawyer Ignacio Ayala wasn’t immediately available for comment when contacted by phone at his offices in Madrid and nor was a spokesman for the customs agency.

Once the face of Spain’s economic resurgence after guiding the country into the euro, Rato became the most senior international policy maker in his country’s history when he took over the IMF in 2004. He cut short his term in Washington to return home and was handed the chairmanship of Bankia SA, which collapsed on his watch in 2012 forcing Spain into a bailout.

Rato is already an official suspect in the National Court’s criminal investigation into Bankia. He told parliament he is innocent of any wrongdoing.

In 2013 the former treasurer of the governing People’s Party Luis Barcenas said that he’d run a secret slush fund for senior officials including Rato and Prime Minister Mariano Rajoy for over a decade. Rajoy denied receiving the payments and Rato’s lawyer Ayala declined to comment through an assistant when contacted at the time.

With Socialist officials in Andalusia being investigated over the embezzlement of benefit funds, voters have turned against the country’s traditional parties and two new groups, the pro-market Ciudadanos and anti-austerity Podemos, have soared in polls.
More

Solar Update. 

With events happening fast in the development of solar power, I’ve decided to create a new section.

SunPower, Apple to build solar projects in China

Thu Apr 16, 2015 10:06am EDT
(Reuters) - Solar panel maker SunPower Corp said it would partner with Apple Inc to build two solar power projects in China's Sichuan province with total capacity of 40 megawatts.

The projects, when complete, will be co-owned by Apple and Sichuan Shengtian New Energy Development Co Ltd, SunPower's project development joint venture.

Completion of the projects, which are expected to provide up to 80 million kilowatt-hours per year, is expected in the fourth quarter of 2015, SunPower said.

Shares of SunPower, which is majority owned by French energy
giant Total SA, were up 1.4 percent at $33.85 in early trading on the Nasdaq on Thursday.

China set a higher-than-expected target for solar power installations for 2015 last month as it seeks to boost renewable energy use.

China said it aims to install 17.8 gigawatts (GW) of solar power capacity this year, up nearly 20 percent from the original goal of 15 GW, with nearly 70 percent from the 10.52 GW of solar generation capacity China installed last year.

Apple, which uses renewable energy to power its data centers, said in February it would buy about $850 million of power from First Solar Inc's California solar farm to cut its energy bill.

SunPower and longstanding rival First Solar last month announced a limited partnership, 8point3 Energy Partners LP, to jointly own some assets. The companies also filed for a proposed initial public offering of the YieldCo.

The move is expected to generate stable cash flows for the companies that have been expanding their power plant businesses.

Another spring weekend, and the colour and grandeur of the countryside is rapidly returning. Over in Washington the only colour Athens wants to see is white, as in a white rabbit. But white’s not a colour, so my guess is that we won’t see it. Have a great weekend everyone.

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

J. K. Galbraith.

The monthly Coppock Indicators finished March

DJIA: +118 Down. NASDAQ: +209 Down. SP500: +161 Down.  

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