Baltic Dry Index. 1055 +09 Brent Crude 48.61
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
"When it becomes serious, you have to lie"
Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.
Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.
Contagion from China’s malaise continues spreading. Whether it’s the
collapse of China’s stock market bubble, the collapse in China’s exports and
imports, the collapse in China’s demand for industrial commodities, the
unexpected Yuan devaluation heralding China’s entry into the fiat currency
wars, Tianjin, the collapse in confidence in Chinese authorities, or a combination of all, China’s biggest
export to the rest of the world for now is deflation contagion. And it’s not
going to end anytime soon. We open with the continuing oil bust. Things are
about to get worse before they get better, if at all.
Below, the Great Reconnect gets serious.
Low Oil Prices Pose Threat to Texas Fracking Bonanza
KARNES CITY, Tex. — No place in Texas produces more oil than Karnes County, but suddenly the
roaring economy here is cooling fast, chilled by the plunging price of crude.
Workers who migrated from far and wide to find work
here, chasing newfound oil riches, are being laid off, deserting
their recreational vehicle parks and going home. Hay farmers who became instant
millionaires on royalty checks for their land have suddenly fallen behind on
payments for new tractors they bought when cash was flowing. Scores of mobile
steel tanks and portable toilets used at the ubiquitous wells are stacked,
unused, along county roads.
-----That
screeching was the price of oil cracking — to under $45 a barrel from more than
$100 a barrel last summer. After a brief revival in the spring, the benchmark
American price has swooned again by more than 25 percent, plunging this week to
a new low since the recession.
----The plunge has rippled far beyond the markets,
sending the economy here and across the entire oil patch into turmoil. Nowhere
is the sharp turn in fortunes as evident as in places like Karnes County and
other parts of Texas, North Dakota, Louisiana, Colorado, Pennsylvania, Arkansas
and Ohio that had little oil or natural gas production until
drillers figured out how to tap into hard shale rocks deep underground.
“People didn’t have to work anymore,” said Elliott
Skloss, a sign maker for the county road and bridge department. “Now they’ll
have to work or panhandle if the oil price doesn’t go back up.” His family
farms had five oil and gas wells that earned monthly checks worth $50,000 just
a year ago, but they now earn one-tenth as much because of the decline in
prices and well production.
Mineral rights that once sold for $40,000 an acre for
the field’s sweet spot here in Karnes County now go for $15,000. The total
county tax base dropped this year for the first time since 2010, by more than
20 percent.
----Many oil companies, including Royal Dutch Shell and Chevron, have had to slash their payrolls this summer.
Chesapeake Energy,
which has prized assets here in the Eagle Ford, recently scrapped its dividend
to save cash. Another Eagle Ford producer, Linn Energy, an energy
producing partnership structured as a limited liability company, stunned Wall
Street recently by announcing its intention to suspend payments to investors to conserve
cash.
More
And in Canada, Western Canada Select now fetches below $23.
Oil sinks below $42 US a barrel, a 6-year low
Predictions of continued oversupply and uneven demand pressure oil markets
CBC
News Posted: Aug 13, 2015 2:38 PM ET Last
Updated: Aug 13, 2015 4:18 PM ET
The main North American oil contract dipped below $42 US for the first time
since 2009 on Thursday, after a report showed high U.S. oil inventories.West Texas Intermediate (WTI) crude sank as low as $41.92 a barrel at mid-afternoon, a new six-year low. It closed at $42.22, down 2.5 per cent today. This time last year, oil was at $94 US a barrel.
Western Canada Select, a Canadian oilsands contract, was trading at $22.78. That is a discount of more than $19 to the WTI contract, as Canadian oil gets hit by refinery and pipeline shutdowns.
The TSX index lost 100 points as energy stocks responded to the lower oil price. The Canadian dollar also fell, to 76.57 cents US.
More
China Mess, Yuan Devaluation Spread to the US
by Wolf Richter • August 14, 2015
China’s auto market, which had been the single most important element in the convoluted growth story of GM and other global automakers, was getting battered even before the yuan devaluation. But now elements coagulate into a toxic mix.Sales of passenger vehicles in July dropped 6.6% from a year ago, to 1.27 million, according to the China Association of Automobile Manufacturers, a 17-month low, after they’d already fallen 3.4% in June, and after they’d relentlessly trended down since late last year.
This debacle happened even though automakers had cut prices and heaped incentives on the market to stem the decline. GM and VW started it, and it has now turned into a price war.
GM’s sales through its joint ventures fell 4% in July year-over-year, to 229,175 vehicles. Despite falling sales and ballooning price cuts, GM remains, at least in its press release, optimistic about sales and profit margins in China, its second largest market, and simply blamed “model changeovers and the phasing out of older Chevrolet vehicles.” So no biggie.
Ford’s sales through its Chinese joint ventures plunged 6% year-over-year, its third monthly decline in a row, to 77,100 vehicles. Unlike GM, it’s publically worried:
“Longer term, we’re still very bullish on China,” Hau Thai-Tang, head of Ford’s global purchasing, told an industry conference in New York. But the company would move to lower output in China if there is a “prolonged period of recessions.”
While some automakers booked gains, like Daimler whose sales surged 42%, others got clobbered, like Nissan whose sales plunged 14%. And VW said today that its Audi sales in July had plummeted 12.5% in China, Audi’s largest market. It sells about a third of its cars there.
----So already declining auto sales, in an already slowing economy, got hammered by the stock market rout in July. But global automakers like GM and Ford, and global component makers too, are now facing the prospects of getting slammed on their financial statements – though they haven’t announced it yet – by an additional problem from their operations in China: the devalued yuan.
The thing is, they have to translate their yuan-based revenues and
profits into their home currencies – dollars, euros, and yen. And for some
automakers, it is a biggie, particularly for, well, GM.
Nearly half of GM’s earnings are generated by its operations in China,
as are a third of VW’s earnings. VW, the other German automakers, and the
Japanese automakers have been benefiting from the sharp decline of their home
currencies against the yuan over the past year when they converted their
yuan-based revenues and earnings into euros or yen. So now, with the yuan
getting devalued, they will have to give up some of these glorious paper gains.
More
Asia dragged down by sagging China stocks, dollar holds gains
Asian equities were mostly lower on Monday, dragged down by faltering
Chinese stocks, while the dollar held modest gains against the euro after
upbeat U.S. economic data, with a further dollar rise seen as the yuan showed
signs of stabilizing for now.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS
fell 0.7 percent.
The index added to last week's loss of 2.6 percent suffered after Beijing
devalued the yuan, buffeting global financial markets and fanning concerns
about China's economy.
---- In a tell-tale sign that some of the relief felt towards the end of last week from a slowing in the yuan's slide could be fading already, Shanghai shares .SSEC lost 0.9 percent after gaining nearly six percent the previous week.
Futures trading also reflected underlying investor pessimism towards an equity market Beijing has tried desperately to prop up, with the China CSI300 futures CIFc1 down 2.1 percent.
Oil prices down near six-year lows also bit into the markets of the region's export-reliant economies. Malaysian stocks .KLSE suffered a 1.5 percent fall and the ringgit MYR=MY was stuck near a 17-year low.
More
Japan economy shrinks in second quarter in setback for 'Abenomics'
Japan's economy shrank at an annualized pace of 1.6 percent in
April-June as exports slumped and consumers cut back spending, adding pressure
on Prime Minister Shinzo Abe to step up his policy drive to lift the economy
out of decades of deflation.
China's economic slowdown and its impact on its Asian neighbors has also
heightened the chance that any rebound in growth in July-September will be
modest, analysts say.
The gloomy data adds to signs that Japan's economy is at a standstill
and heightens pressure on policymakers to offer additional monetary or fiscal
stimulus later this year.
The contraction in gross domestic product (GDP) compared with a median
market forecast of a 1.9 percent fall and followed a revised expansion of 4.5
percent in the first quarter, Cabinet Office data showed on Monday.
More
Brazil protesters keep pressure on President Rousseff
Hundreds of thousands of demonstrators returned to the streets in dozens
of Brazilian cities on Sunday to call for the impeachment of President Dilma
Rousseff, blaming her for a vast corruption scandal and the economy's worst
slump in a quarter century.
Less than a year into her tumultuous second term, the left-wing
president's approval rating has dwindled to single digits and polls show that
two in three Brazilians support calls for her impeachment.
In the third wave of demonstrations against Rousseff this year,
protesters convened by social media across Latin America's largest country
created a festive family atmosphere and chanted "Out with Dilma!"
About 135,000 people swarmed Sao Paulo's financial district, according
to pollster Datafolha, and 25,000 assembled in front of Congress in Brasilia,
according to police. Both numbers were roughly in line with similar protests in
April but more modest than turnout in March.
-----
There is widespread support for the protest movement as rising unemployment and
inflation presage the worst economic downturn since at least 1990. Government
austerity efforts meant to keep Brazil's investment-grade credit rating have
turned off even Rousseff's supporters and met resistance from lawmakers.
More
Riskiest End of the Junk Bond Market Just Blew Up
by Wolf Richter • August 15, 2015
Worst one-day hit since the Financial Crisis.
You wouldn’t know by looking at the US Treasury market, which remained
relatively sanguine this week, with only a little panic buying on Tuesday. So
10-year Treasuries ended the week near where they’d started it. But at the
other end of the spectrum, the riskiest portion of the junk bond
market just blew up spectacularly.
There were a lot of culprits to catch the blame. At the top of the list
was the devaluation of the Chinese yuan. It caught the corporate bond markets
by surprise, though it shouldn’t have, injected all kinds of stress into them,
and drove up bond spreads, with investors demanding a higher yields for riskier
bonds. It hit the riskiest segment of the junk bond market with a sledge
hammer.
----This scenario was punctuated by a cascade of bankruptcies that eviscerated
unsecured bond holders, and not all of them were energy-related. In Delaware
alone, there were 20 Chapter 11 filings this week, including the prepacked
bankruptcy of Hercules Offshore and a gaggle of related companies. Risk, which
the Fed had so ingeniously removed from the equation, is suddenly rearing its
ugly head again.
How suddenly? This chart of yields at the riskiest end of the junk bond
market – bonds rated CCC and below – shows what happened. These bonds have been
selling off over the past 12 months, with exception of the sucker rally earlier
this year, and their yields more than doubled from less than 7.9% in
June a year ago to 16.2% by Thursday evening. And Thursday was a massacre:
More
In a
time of universal deceit, telling the truth is a revolutionary act.
George
Orwell
At the Comex silver depositories Friday
final figures were: Registered 55.94 Moz, Eligible 116.69 Moz, Total 172.63
Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks today, just more on the developing and
strengthening Pacific El Nino.
'Bruce Lee' El Nino: Pacific coast braces for potential recordbreaking winter storms
Forecasters are warning that this new El Niño seems set to be more powerful than any in the past 65 years
Friday 14 August 2015
Conditions are now ripe in the Pacific Ocean for the onset of a
record-breaking El Niño this winter which could dangerously disrupt weather
patterns around the globe – but with the possible benefit of delivering rain to
drought-gripped California.
Already nicknamed “Bruce Lee” after the late martial arts star, because
of the punch that it might pack, forecasters are warning that this new El Niño
seems set to be more powerful than any in the past 65 years at least and more
potent even than the one of 1997-98, when the phenomenon first entered the
popular lexicon. Its effects included fierce forest fires in south-east Asia
and widespread flooding and mudslides in parts of Latin America.
“We’re predicting this El Niño could be among the strongest El Niños in
the historical record,” noted Mike Halpert, deputy director of the Climate
Prediction Centre for the National Oceanic and Atmospheric Administration
(NOAA), pointing to a telltale warming of the surface waters in the eastern
reaches of the Pacific that is already well under way and apparently
accelerating.
While a strong El Niño could be a blessing for California, where four
years of drought have seen water rationing and intense brush and forest fires
this summer, some of which are still burning this weekend, scientists say all
kinds of variables could yet intervene to hinder rainfall levels. A second area
of warm waters in the northern Pacific, for example, could cause a dip in the
jet stream that might propel expected stormy weather south into Central and
South America, skipping California.
“There are still probably more unknowns regarding temperature and
precipitation in the winter than there are unknowns,” Mr Halpert said. Asked
how hopeful California should be, he added: “A big El Niño guarantees nothing.
At this point, there’s no cause for rejoicing that El Niño is here to
save the day.”
Even if predicting where its power will be most felt is difficult, that
it will have great power does not seem to be in dispute. For a new El Niño to
be born, the Oceanic Niño Index (ONI), which measures sea surface temperatures
in the tropical Pacific, must rise to plus 0.5. (Zero is the average.) In
1997-98, the index topped out at 2.3, producing an event that took an estimated
23,000 lives around the globe and caused some $45bn (then £27bn) in damage.
According to the latest measurements, those same Pacific waters are now
at an index of 1.0. But that number is climbing and seems certain to go past
2.0 and perhaps well beyond. And this could El Niño could be a long one. “There
is a greater than 90 per cent chance that El Niño will continue through the
northern hemisphere winter 2015-16, and around an 85 per cent chance it will last
into early spring 2016,” the NOAA said.
More
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? DC? A quantum
computer next?
New research may enhance display & LED lighting technology
Recently, quantum dots (QDs)–nano-sized semiconductor particles that produce bright, sharp, color light–have moved from the research lab into commercial products like high-end TVs, e-readers, laptops, and even some LED lighting. However, QDs are expensive to make so there’s a push to improve their performance and efficiency, while lowering their fabrication costs.Researchers from the University of Illinois at Urbana-Champaign have produced some promising results toward that goal, developing a new method to extract more efficient and polarized light from quantum dots (QDs) over a large-scale area. Their method, which combines QD and photonic crystal technology, could lead to brighter and more efficient mobile phone, tablet, and computer displays, as well as enhanced LED lighting.
With funding from the Dow Chemical Company, the research team, led by
Electrical & Computer Engineering (ECE) Professor Brian Cunningham,
Chemistry Professor Ralph Nuzzo, and Mechanical Science & Engineering
Professor Andrew Alleyne, embedded QDs in novel polymer materials that retain
strong quantum efficiency. They then used electrohydrodynamic jet (e-jet)
printing technology to precisely print the QD-embedded polymers onto photonic
crystal structures. This precision eliminates wasted QDs, which are expensive
to make.
These photonic crystals limit the direction that the QD-generated light
is emitted, meaning they produce polarized light, which is more intense than
normal QD light output.
According to Gloria See, an ECE graduate student and lead author of the
research reported this week in Applied Physics Letters, their replica
molded photonic crystals could someday lead to brighter, less expensive, and
more efficient displays. “Since screens consume large amounts of energy in
devices like laptops, phones, and tablets, our approach could have a huge
impact on energy consumption and battery life,” she noted.
“If you start with polarized light, then you double your optical
efficiency,” See explained. “If you put the photonic-crystal-enhanced quantum
dot into a device like a phone or computer, then the battery will last much longer
because the display would only draw half as much power as conventional
displays.”
---- “We made a tiny device, but the process can easily be scaled up to large flexible plastic sheets,” See
said. “We make one expensive ‘master’ molding template that must be designed very precisely, but we can use the template to produce thousands of replicas very quickly and cheaply.”
More
The Lowly Lightbulb Outshines Solar and Wind on U.S. Power Grids
August 14,
2015 — 12:01 AM BST Updated on August 14, 2015 — 11:53 AM BST
Utility and power grid managers in the U.S. are learning that the best
way to cut carbon emissions and improve efficiency is the easiest: Just change
your lightbulbs.
The nation’s largest grid, serving more than 61 million customers from
Washington to Chicago, is revising its demand forecasts after recognizing that
better lighting has undercut its projections. Swapping all of Thomas Edison’s
incandescent lightbulbs with lamps containing light emitting diodes, or LEDs,
would save enough electricity to power 20 million American homes, according to
the Energy Department.
---- “It’s a total bulb revolution,” Prajit
Ghosh, director of power and renewables research at Wood Mackenzie in Houston,
said Aug. 10 by phone. “The decline in load growth from both macroeconomic
factors and energy-efficiency gains is by far the biggest reason carbon
emissions fell. At least for the last five years, a majority of these savings
came from lighting.”
More
The monthly Coppock Indicators finished July
DJIA: +88 Down. NASDAQ:
+189 Down. SP500: +116 Down.
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