Baltic Dry Index. 1090 +04 Brent Crude 53.20
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Wobble, wobble toil and trouble; Fire burn and caldron bubble.
China, with apologies to Bill Shakespeare.
We open today with the big story, stocks, and Chinese stocks in particular. Are we witnessing the 21st century end of modern tulip mania in Shanghai? Is this the equivalent of Amsterdam March 1637? Not if the China Securities Regulatory Commission (CSRC) has any say in the matter. After yesterday’s Chinese stocks rout, they issued a six line statement promising to support Chinese stocks. To this old commodities trading dinosaur, Chinese stocks and stock markets were never fit for purpose, and were always going to end in tears. But the message from the CSRC is clear, bring out your unwanted, unprofitable, bubbly, Semper augustus tulip bulbs, we’ll pay cash on the barrel for all that you’ve got.
I suspect that many if not most holders will be only too happy to fill their CSRC boots. It’s not often that other than banksters get a government bailout. The last time was 1982 in Kuwait at the Souk al-Manakh I believe. Someone needs to remind the CSRC how well that turned out for Kuwait.
Below, the state of opening play as we wait for Shanghai’s close later today. Whatever else it is, it’s just not cricket, as they say at Lords if not in the House of Lords as shown in The Sun. It’s not market based, capitalism price discovery either. But that’s a discussion for another day after we see how Shanghai closes later. We wish the best of luck to those trying to get out. As for those "malicious shorts," well what is there to say?
China Regulator to Keep Up Market Stabilization After Stock Drop
July 27, 2015 — 9:56 PM BST
China’s securities regulator chimed in after the nation’s biggest
one-day stock market rout since 2007, assuring investors the government hasn’t
withdrawn support for equities.
The China Securities Regulatory Commission will continue to “stabilize”
the market and “prevent systemic risk,” spokesman Zhang Xiaojun said in a
statement on its website Monday. He was responding to media reports saying the
government was pulling back from support measures adopted after the China’s
stock market began tumbling last month, according to the statement.
Investors have been concerned that unprecedented government intervention
isn’t sustainable after a three-week rally halted a share price tumble. The
International Monetary Fund recently urged China to unwind its support
measures, saying share prices should be allowed to settle through market
forces, a person familiar with the matter said last week.
The short six-line statement came hours after the Shanghai Composite
Index closed down 8.5 percent on Monday. State-owned PetroChina Co. sank 9.6
percent.
More volatility is expected but “the government’s efforts will curb a
more severe selloff,” Brad Gastwirth, chief executive officer at ABR Investment
Strategy, said by e-mail.
The regulator also said Monday the state-backed China Securities
Finance Corp., which provides margin financing and liquidity, hasn’t “exited”
the market and will increase holdings at “appropriate” times.
China Securities Finance was deployed this month to buy up equities as
investors sold. The agency, which may have several trillion yuan available to
support stocks, was reported by Reuters early on Monday as having repaid some
loans recently in a sign of a possible pullout.
Zhang said the regulator won’t rule out the possibility that some companies or individuals have been “maliciously shorting” stocks and will mete out “strict” punishments if found true.
More
http://www.bloomberg.com/news/articles/2015-07-27/china-regulator-to-keep-up-market-stabilization-after-stock-drop
China stocks tumble, suffer biggest one-day loss in eight years
Major indexes suffered their largest one-day drop since 2007, shattering a period of relative calm in China's volatile stock markets since Beijing unleashed a barrage of support measures to arrest a slump that began in mid-June.
The CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen plunged 8.6 percent, to 3,818.73, while the Shanghai Composite Index .SSEC lost 8.5 percent, to 3,725.56 points.
While the falls followed lackluster data on profit at Chinese industrial firms on Monday and a disappointing private factory sector survey on Friday, there was little to explain the scale of the sell-off.
Some analysts said fears that China may hold off from further loosening of monetary policy had contributed to souring investor sentiment.
"The recent rebound had been swift and strong, so there's need for a technical correction," said Yang Hai, strategist at Kaiyuan Securities.
He said the trigger was "a sluggish U.S. market amid stronger expectations of a Fed rate rise in the fourth quarter. That, coupled with China's rising pork prices, fuels concerns that China would refrain from loosening monetary policies further."
More
http://www.reuters.com/article/2015/07/27/us-markets-china-stocks-idUSKCN0Q10KE20150727
U.S. stocks follow China’s rout with 5th straight decline
Published: July 27, 2015 4:45 p.m. E
The global equity selloff sparked by a Chinese stock-market rout spread to
Wall Street on Monday, propelling U.S. stock indexes to their fifth consecutive
session of losses. Disappointing earnings over the past week and lackluster economic data has put pressure on the main equities, prompting investors to sell risky assets such as stocks and commodities while piling into havens such as Treasurys and gold.
The Nasdaq Composite COMP, -0.96% was hit the hardest, falling 48.85 points, or 1%, to 5,039.78. The tech-heavy index is now 3.4% below its all-time high reached a weak ago.
The Dow Jones Industrial Average DJIA, -0.73% fell 127.94 points, or 0.7%, to 17,440.59, with 25 of its 30 members finishing lower.
The S&P 500 SPX, -0.58% dropped 12 points, or 0.6%, lower at 2,067.64, with nine of its 10 main sectors finishing lower. Energy and materials stocks led the losses, while utilities were the lone bright spot, finishing 1.3% higher.
A dramatic slide overnight in the Shanghai Composite SHCOMP, -1.00% which closed 8.5% lower for its biggest one-day slide since February 2007, was the main reason for the market’s drop. China watchers note the rout in Shanghai has prompted Beijing to try to reassure investors again.
European stocks SXXP, -2.21% also sold off, with the main benchmark, the Stoxx Europe 600, dropping 2.2%.
More
http://www.marketwatch.com/story/wall-street-poised-to-join-in-global-selloff-led-by-china-2015-07-27
Kuwait’s Souk al-Manakh Stock Bubble
By Jesse ColomboPerhaps the greatest speculative mania of all time was Kuwait’s Souk al-Manakh stock bubble in the early 1980s, which is as fascinating as it was devastating. The bull market began when investing in local “Gulf Companies” became n vogue with Kuwaitis who wished to ride the coattails of the Middle East’s oil-driven economic boom of that time. A peculiar Kuwaiti custom allowed traders to pay for stocks using post-dated checks, under the assumption that default would be unthinkable.
Unsurprisingly, human avarice prevailed as some traders speculated in stocks paid for by billions of dollars worth of unsecured checks, causing the stock market to inflate like a balloon and pop in a most analogous manner.
----By the summer of 1981, an unofficial over-the-counter stock market was formed called the Souk al-Manakh, which specialized in the trading of highly speculative “unregulated non-Kuwaiti companies,” such as those incorporated in Bahrain or the United Arab Emirates. (3) Formerly a camel trading venue (1), the Souk’s history was long intertwined with trading. Not long after the Souk’s founding, the market became a hotbed of speculation, overflowing with “portly gentlemen in flowing white gowns (thobes) with capacious pockets full of papers, worry beads in one hand, cigarette in the other.” (1) Interest in Kuwait’s heavily-regulated official market dwindled as the Souk earned the reputation of being the more exciting of the two markets, in which one could double their money within a few months. Sharing more similarities with a casino than a stock market, the Souk al-Manakh attracted wealthy high-rollers whose preferred method of trading entailed placing orders via car phones.
----Adding fuel to the fire was the type of informal margin financing through the use of postdated checks, which were accepted as a cash equivalent, as per Kuwaiti custom. This type of personal credit didn’t require a bank balance; the “receiver hopes that there will be one when the due date rolls around.” (5) Kuwaiti culture mandated that payment would be made, as a default would have violated the tradition of trust (1), as well as brought shame upon the defaulter’s entire family.
-----Word of the Souk al-Manakh “money machine” spread like wildfire around the Middle East, causing wealthy Palestinians, Egyptians and Pakistanis to purchase stock through Kuwaiti nominees as only Kuwaitis could trade legally. Non-Kuwaitis were just as eager to invest despite their lack of legal standing. At the boom’s peak in 1980-1981, some stocks were advancing 100 percent per month, with some advancing tenfold. One stock, The Gulf Company for Industrial Development, even advanced fifteenfold. The combination of extreme stock gains and astronomical amounts of leverage made many speculators millionaires and billionaires many times over.
----The height of the society-wide insanity occurred when eight speculators, known as “the Cavaliers,” floated a total of $55 billion in postdated checks, seemingly in an attempt to corner the market. The most prolific check writer among the Cavaliers was Jassim al-Mutawa, a Passport Office employee in his early-twenties, who managed to pass off $14 billion all by himself. Sloppy accounting on the part of his brother and partner, Najeeb al-Mutawa, caused Jassim to become a staggering $3.4 billion overdrawn. (1) According to “Collapse of the Souk”:
“Eventually, approximately 29,000 checks – amounting to $93 billion –
were estimated to have been written against the shares of companies that were,
for practical purposes, worthless.”
Morehttp://www.thebubblebubble.com/souk-al-manakh/
The main purpose of the stock
market is to make fools of as many men as possible.
Bernard Baruch.
At the Comex silver depositories Monday
final figures were: Registered 58.16 Moz, Eligible 119.18 Moz, Total 177.34
Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No update today, we’re
all busy watching China’s Souk.
“I am hard-pressed to recall when any
sort of bubble was accurately identified in real time on the cover of a major
media publication. If anything, the opposite is true.”
Barry Ritholtz
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?
Below MIT builds a
better Li-ion mousetrap. Did Tesla just get caught?
New manufacturing approach slices lithium-ion battery cost in half
Reinventing how these batteries are made also improves their performance and recyclability.
June 23, 2015
An advanced manufacturing approach for lithium-ion batteries, developed
by researchers at MIT and at a spinoff company called 24M, promises to
significantly slash the cost of the most widely used type of rechargeable
batteries while also improving their performance and making them easier to
recycle.
“We’ve reinvented the process,” says Yet-Ming Chiang, the Kyocera
Professor of Ceramics at MIT and a co-founder of 24M (and previously a co-founder
of battery company A123). The existing process for manufacturing lithium-ion
batteries, he says, has hardly changed in the two decades since the technology
was invented, and is inefficient, with more steps and components than are
really needed.
The new process is based on a concept developed five years ago by Chiang
and colleagues including W. Craig Carter, the POSCO Professor of Materials
Science and Engineering. In this so-called “flow battery,” the electrodes are
suspensions of tiny particles carried by a liquid and pumped through various
compartments of the battery.
The new battery design is a hybrid between flow batteries and
conventional solid ones: In this version, while the electrode material does not
flow, it is composed of a similar semisolid, colloidal suspension of particles.
Chiang and Carter refer to this as a “semisolid battery.”
Simpler manufacturing process
This approach greatly simplifies manufacturing, and also makes batteries
that are flexible and resistant to damage, says Chiang, who is senior author of
a paper in the Journal of Power Sources analyzing the tradeoffs
involved in choosing between solid and flow-type batteries, depending on their
particular applications and chemical components.
This analysis demonstrates that while a flow-battery system is
appropriate for battery chemistries with a low energy density (those that can
only store a limited amount of energy for a given weight), for
high-energy-density devices such as lithium-ion batteries, the extra complexity
and components of a flow system would add unnecessary extra cost.
Almost immediately after publishing the earlier research on the flow
battery, Chiang says, “We realized that a better way to make use of this
flowable electrode technology was to reinvent the [lithium ion] manufacturing
process.”
Instead of the standard method of applying liquid coatings to a roll of
backing material, and then having to wait for that material to dry before it
can move to the next manufacturing step, the new process keeps the electrode
material in a liquid state and requires no drying stage at all. Using fewer,
thicker electrodes, the system reduces the conventional battery architecture’s
number of distinct layers, as well as the amount of nonfunctional material in
the structure, by 80 percent.
Having the electrode in the form of tiny suspended particles instead of
consolidated slabs greatly reduces the path length for charged particles as
they move through the material — a property known as “tortuosity.” A less
tortuous path makes it possible to use thicker electrodes, which, in turn,
simplifies production and lowers cost.
In addition to streamlining manufacturing enough to cut battery costs by
half, Chiang says, the new system produces a battery that is more flexible and
resilient. While conventional lithium-ion batteries are composed of brittle
electrodes that can crack under stress, the new formulation produces battery
cells that can be bent, folded or even penetrated by bullets without failing.
This should improve both safety and durability, he says.
The company has so far made about 10,000 batteries on its prototype
assembly lines, most of which are undergoing testing by three industrial
partners, including an oil company in Thailand and Japanese heavy-equipment
manufacturer IHI Corp. The process has received eight patents and has 75
additional patents under review; 24M has raised $50 million in financing from
venture capital firms and a U.S. Department of Energy grant.
The
company is initially focusing on grid-scale installations, used to help smooth
out power loads and provide backup for renewable energy sources that produce
intermittent output, such as wind and solar power. But Chiang says the
technology is also well suited to applications where weight and volume are
limited, such as in electric vehicles.
More
The monthly Coppock Indicators finished June
DJIA: +98 Down. NASDAQ:
+192 Down. SP500: +127 Down.
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