Baltic Dry Index. 1102 -16 Brent Crude 55.40
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“Markets can remain
irrational longer than you can remain solvent.”
John Maynard Keynes.
Will the Fed pull the trigger on ZIRP at next week’s meeting? Despite
yesterday’s US jobless claims figure, most economists and Fed watchers still
think it will be September for a meaningless quarter point rate hike. But it
all adds to the rising gloom in the global economy. If the commodity price
plunge is right about a new global recession arriving right out of the BRICs,
the Fedster’s and the other 40 thieving central banks are all out of ammo,
leaving stocks facing a coming crash. How did China rig its stock market this
month?
Below, getting out early beats getting carried out last.
If economists could manage to
get themselves thought of as humble, competent people on a level with dentists,
that would be splendid.
John Maynard Keynes.
Lowest jobless claims since 1973 is ammo for Fed hawks
Published: July 23, 2015 11:08 a.m. ET
The number of people who applied for U.S. unemployment benefits slid to the
lowest level since 1973 in the seven days ended July 18, another sign of strong
labor-market conditions.New applications for U.S. unemployment benefits declined by 26,000 to 255,000 in the seven days ended July 18. New claims have been under 300,000 since late February, the longest run in 15 years.
The dollar and Treasury yields rose after the claims report signalled that the economy may be stronger than expected. Stocks initially struggled.
While economists are likely to be skeptical of this week’s drop, which put claims at the lowest level since November 1973, the data should provide ammunition for those Federal Reserve officials who have been pushing for higher interest rates.
---- Fed officials will meet next week to chart monetary policy for the next six weeks. Economists don’t think the U.S. central bank will decide to raise rates next week, but many will be looking for a signal from the Fed that it is preparing for a rate hike in September.
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The true cost of China’s multibillion-dollar market intervention
Published: July 23, 2015 5:16 p.m. ET
Beijing estimated to have spent 10% of GDP to support market
As the Shanghai Composite Index dove and panic sales spread, the Chinese government spent billions of dollars to soothe battered sentiment and shore up the stock market. But China may eventually end up paying a much higher price from delayed reforms and a distorted stock market, analysts say.For now, the throw-everything-at-the-wall-and-see-what-sticks strategy appears to be working.
The Shanghai Composite SHCOMP, +1.07% rallied 2.4% on Thursday to close up for a sixth session, a stark contrast to its roller coaster ride earlier this month.
Between the end of June and early July, the Chinese government announced at least 40 measures to prop up the market, including an interest-rate cut by the central bank and establishing a stabilization fund to outright buy stocks.
All together, Chinese authorities are estimated to have mobilized as much as 5 trillion yuan, almost 10% of the gross domestic product, to halt panic sales, Reuters reported.
But such drastic tactics, while effective in the short term, could discourage foreign investors’ participation in the stock market and challenge China’s aspirations of becoming a global financial power.
“We know that China wants to open its capital markets to foreigners, and that will require an improvement in standards.” said Nigel Green, chief executive of deVere Group.
Chris Konstantinos, director of international portfolio management at RiverFront Investment Group, also noted that the Chinese government’s “carte blanche” on market action could offend “democratic societies’ sensibilities.”
“I don’t believe it bodes well for China’s recent overtures toward greater transparency and the prospects for attracting a more global shareholder base for Chinese shares,” he said.
Earlier this week, Bridgewater Associates LP, the world’s largest hedge fund, warned its investors that China’s market turmoil will have broad repercussions, a dramatic reversal from its usual bullish stance on the country, The Wall Street Journal reported.
Bridgewater joins a growing list of hedge-fund mangers who have turned more bearish on China in recent weeks, including Elliott Management Corp.’s Paul Singer and Pershing Square Capital Management LP’s Bill Ackman.
More
http://www.marketwatch.com/story/the-true-cost-of-chinas-multibillion-dollar-market-intervention-2015-07-23
What’s going on with global trade?
John Shmuel Wednesday, Jul. 22, 2015
In the three decades before the recent financial crisis, rapid
globalization helped the world’s trade grow at twice the rate of the global
economy. But those halcyon days seem to be behind us. Instead, global
trade has become stubbornly weak and has yet to return to its pre-crisis
levels, all the while continuing to trend below the world’s GDP growth.
The latest data from the CPB World Trade Monitor shows that the global
economy just had its worst two quarters for trade since the 2008 financial
crisis, and no one seems to know why. Is the drop simply cyclical, or a sign of
something more systemic in the world’s economy?
“The extent of the weakness is puzzling,” Governor Stephen Poloz said
last week after he trimmed the BoC’s benchmark rate from 0.75 per cent to 0.50
per cent.
“We can attribute some of this,” he said. “But a bunch of it we can’t.”
Krishen Rangasamy, economist with National Bank Financial, said there
was a significant drop in trade volumes in May, but also a sharp downward
revision of data for the prior month.
“It will now take a miraculous recovery in June, highly unlikely in our
view, to prevent the first back-to-back quarterly contraction of trade volumes
since 2009.”
Global trade hit historic lows after the financial crisis, but by 2011,
it seemed trading volume between countries had improved, with growth in that
year reaching 6.2 per cent — not far off from the pre-crisis average of 7.1 per
cent. But in the following years, trade started slumping again. In 2012, growth
was only 2.8 per cent, while in 2013, it averaged three per cent.
Last year, the World Trade Organization forecast that global trade would
bounce back to 4.7 per cent in 2014. They ended up being wrong. The volume of
goods traded around the world came in at a much weaker 2.8 per cent. Trade
growth has now slumped below growth in the world’s gross domestic product,
which has averaged about three per cent in real terms in the past few years.
“The post-crisis decline in the growth rate of the ratio of global trade
to GDP has been cause for some concern that global trade has peaked, and that
we are now reaching a new normal in which trade levels will be weak in
comparison to about a decade ago,” said economists in an expansive report last
month.
More
Oil Warning: The Crash Could Be the Worst in More Than 45 Years
There's only one thing holding back
a price rebound. It's a big thing
July 23, 2015 — 11:00 AM BST
Morgan Stanley has been pretty pessimistic about oil prices in 2015,
drawing comparisons with the some of the worst oil slumps of the past
three decades. The current downturn could even rival the iconic price crash of
1986, analysts had warned—but definitely no worse.
This week, a revision: It could be much worse.
Until recently, confidence in a strong recovery for oil prices—and oil
companies—had been pretty high, wrote such analysts
as Martijn Rats and Haythem Rashed in a report to
investors yesterday. That confidence was based on four premises, they said, and
only three have proven true.
---- For now, Morgan Stanley is sticking with its original thesis that prices will improve, largely because OPEC doesn't have much more spare capacity to fill and because oil stocks have already been hammered.
But another possibility is that the supply of new oil coming from
outside the U.S. may continue to increase as sanctions against Iran
dissolve and if the situation in Libya improves, the Morgan Stanley
analysts said. U.S. production could also rise again.
A recovery is less certain than it once was, and the slump could last for
three years or more—"far worse than in 1986."
"In that case," they wrote, "there would be little in
analysable history that could be a guide" for what's to come.
More
“It is better to be roughly
right than precisely wrong.”
John Maynard Keynes.
At the Comex silver depositories
Thursday final figures were: Registered 58.13 Moz, Eligible 119.86 Moz, Total
177.99 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, move over Greece. Make way for giant Italy.
Will Italy beat Great Britain to the EU door marked exit? H2 2015 now looks
worse with each passing day. Things are turning downright ugly in Europe now
that Germany has reverted to form. Portugal, Spain, France and Italy, all like
Greece need some debt reduction. Of
course they also need reform, but this is the EUSSR. Any reform is likely to be
marginal or irrelevant to the underlying problem of the failing economy’s. Just
wait until Germany shuts down Italy’s stock market for a month like Greece! Getting a yes vote for Brexit next year is
starting to look more like a certainty.
“When the capital
development of a country becomes a by-product of the activities of a casino,
the job is likely to be ill-done”
John Maynard Keynes.
Beppe Grillo calls for nationalisation of Italian banks and exit from euro
Five Star Movement’s populist leader compares Greek bailout talks to ‘explicit nazism’ and says Italy must use its €2tn debt as leverage against GermanyThursday 23 July 2015 14.35 BST
The populist leader of Italy’s second largest political party has called for the nationalisation of Italian banks and exit from the euro, and said the country should prepare to use its “enormous debt” as a weapon against Germany.
Former comedian-turned-politician Beppe Grillo, who transformed Italian politics when he launched his anti-establishment Five Star Movement in 2009, has long been a bombastic critic of the euro.
More
http://www.theguardian.com/world/2015/jul/23/beppe-grillo-calls-for-nationalisation-of-italian-banks-and-exit-from-euro
How Beppe Grillo's social media politics took Italy by storm
Jamie Bartlett
But his stance hardened significantly in a blogpost
on Thursday in which he compared the Greek bailout negotiations to
“explicit nazism”.Grillo constructed what he called a “Plan B” for Italy, which he said needed to heed the lessons of Greece so that it was ready “when the debtors come round”.
His plan called for Italy to adopt a clear anti-euro stance and to shake off its belief that – if forced to accept tough austerity – other “peripheral” countries would come to its aid.
Grillo said Italy had to use its enormous €2tn (£1.4bn) debt as leverage against Germany, implying that the potential global damage of an Italian default would stop Germany from “interfering” with Italy’s “legitimate right” to convert its debt into another currency.
He said Greece’s hand had been forced by the threat of bankruptcy to its banks, and that Italy therefore needed to nationalise its banks and shift to another currency.
“[This] is how not to lose the first battle we will face when the time comes to break away from the union and the European Central Bank,” Grillo wrote.
Setting aside Grillo’s colourful language and analogies, analyst Vincenzo Scarpetta of Open Europe said there was some merit to his arguments.
“That blogpost does have some elements of truth,” Scarpetta said. “The lesson from Greece was that if you want to be in the eurozone you have to agree to rules of austerity.”
The strength of anti-euro sentiment in Italy is easy to overlook since Matteo Renzi, the centre-left prime minister and head of the Democratic party, is a strong defender of Italy’s role in the eurozone.
But Scarpetta pointed out that supporters of the Five Star Movement, coupled with supporters of the rightwing Northern League, which is also anti-euro, means that about 40% of Italians are at least sympathetic to anti-euro sentiments.
http://www.theguardian.com/world/2015/jul/23/beppe-grillo-calls-for-nationalisation-of-italian-banks-and-exit-from-euro
Greece Extends Market Shutdown as Government Begins Discussions
July 23, 2015 — 5:26 PM BST
The Greek government extended the shutdown of its financial markets at least
through Monday as it prepared to welcome creditors for negotiations on a third
bailout program.A decision on when and under what conditions Greek markets will reopen was deferred to next week, a government official told reporters on Thursday, asking not to be named in line with policy. The Athens Stock Exchange, multilateral trading facility and electronic secondary market for bonds have been closed since June 29, when the government issued a decree imposing capital controls and a forced bank holiday.
Greek officials setting the ground rules for a reopening of the Athens exchange need to decide whether to exempt investors from capital controls and risk more money heading for the exit, or safeguard scarce liquidity and get further isolated from global markets. MSCI Inc. is considering a downgrade of the country and FTSE will decide whether to keep Greek securities its its global indexes on Friday.
More
The difficulty lies not so
much in developing new ideas as in escaping from old ones.
John Maynard Keynes.
Solar & Related Update.
With events
happening fast in the development of solar power, I’ve added this new section.
Updates as they get reported. Is converting sunlight to usable cheap AC energy
mankind’s future from the 21st century onwards? A quantum computer
next?
Boris Johnson unveils plans to make London the electric vehicle capital of Europe
Wednesday 22 July 2015
The Mayor of London Boris Johnson has unveiled his new plans to make London
the ultra-low emission vehicle capital of Europe, which include lowering the
congestion charge further for low-emission vehicles and giving grants to taxi
drivers to encourage them to switch to electric cars.
The plan sets out a series of goals that hope to encourage the use and
increase the numbers of ultra-low emission vehicles (ULEV) in the city.
The ULEV delivery plan lays out a number of schemes and areas of
exploration, including improving the congestion charge discount for ULEVs,
increasing the number of electric vehicle charging points, and giving
decommissioning grants to taxis that are more than 10 years old, in an effort
to encourage drivers to take up zero emission vehicles.
The plans could even lead to the introduction of preferential access and
lower parking charges for ULEV vehicles in some parts of London. The Mayor's
Office has said it will "explore" this idea, and will work with
London's boroughs to develop it.
The Mayor's announcement came as the London Fire Brigade announced that 57 of
their support vehicles will be replaced with hybrid electric cars by next year.
The Brigade is also looking into the adoption of low emission fire engines,
calling on industry to bring forward new technologies that can meet their
demands.London's New Routemaster buses are already hybrids, and Transport for London (TfL) is looking to make the bus fleet greener, through introducing more electric buses and new electric-only routes.
London is the most polluted place in the country, with air toxicity levels in some areas reaching up to three-and-a-half times the EU legal limit. A recent study by TfL and the Greater London Authority found that 9,500 Londoners died early in 2010 because of pollution.
More
Another weekend, and
the first of many in German captivity for Greeks. Oh well, onwards to Italy. Have
a great weekend everyone. Enjoy the good times while they last.
“How
long will it be necessary to pay City men so entirely out of proportion to what
other servants of society commonly receive for performing social services not
less useful or difficult?”
John Maynard Keynes.
The monthly Coppock Indicators finished June
DJIA: +98 Down. NASDAQ:
+192 Down. SP500: +127 Down.
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