Baltic Dry Index. 1162 -35 Brent Crude 49.82
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Never trust the advice of a man in difficulties.
Aesop.
It is time to be safely on the side lines and out of all risk. While Greece may or may not be fixed, China certainly isn’t. And what happens next in China is far more important to the global economy, than Greece or even the dying, wealth and job destroying, European Monetary Union. China, the world’s second largest global economy, albeit, still largely a communist command economy, is in deep trouble. All the wheels may not have come off, but the ones at the front which steer their economy have come off. Like a US police car chase video of fleeing bandits running on rims, for now China is running on rims. How it all ends is anyone’s guess. But that it ends badly isn’t in doubt.
Three months ago, no one forecast that in short order, China’s Communist Party dictated stock market bubble would have blown up, China’s exports would be collapsing by 8 percent, 13 percent to dying Europe its largest market, or that in a panic of epic proportions, China would have entered the currency wars by effectively nuking Japan and Germany.
In short order welcome back to the financial crisis of 2008-2009 but on steroids. Our central banksters reflation gambit 2008-2014 has blown up. Already at the zero bound on interest rates, and with stock market bubbles everywhere that didn’t trickle down to Main Street or the real world economy, China is now exporting deflation to the rest of the world, and a commodity depression to the emerging market commodity economies. We haven’t seen anything yet!
"For more than two thousand years gold's natural qualities made it man's universal medium of exchange. In contrast to political money, gold is honest money that survived the ages and will live on long after the political fiats of today have gone the way of all paper."
Hans F. Sennholz
China guides the yuan lower for a third day
Published: Aug 12, 2015 11:36 p.m. ET
China guided its currency lower for a third day Thursday after briefly
intervening to prop it up the day before, showing how the leadership is
struggling to manage the market in largely uncharted territory for Beijing.The central bank engineered what looked like a win-win when it ceded more control of its currency to markets earlier this week, in a step toward liberalization that also gives Chinese exporters an edge.
But now it also has to manage market expectations to keep the yuan from entering a free fall — a challenge for central banks worldwide but one that China has avoided by tightly controlling the value of its currency.
China intervened in the currency market Wednesday in the final moments of trading, people familiar with the matter said, after the yuan weakened nearly 2% — the daily limit — to its lowest level against the dollar in four years. On Thursday, the central bank set the yuan’s fixing only marginally lower, a sign it wants to let the yuan depreciate but only in a measured way.
http://www.marketwatch.com/story/china-guides-the-yuan-lower-for-a-third-day-2015-08-12
Who’s Crazy Now? Yuan Bears Vindicated by Tumble See More Pain
August 13, 2015 — 5:30 AM BST
Sue Trinh had to defend her sanity. Albert Edwards almost got kicked out of
meetings. Kevin Lai was ignored by clients for an entire year.Once ridiculed for their bearish forecasts on China’s currency, the analysts who predicted this week’s devaluation don’t look so crazy now. As investors around the world ask what happens next, the forecasters who got it right say the yuan has further to fall.
“Some investors told me I was crazy,” Trinh, the senior currency strategist at Royal Bank of Canada in Hong Kong who predicted a yuan retreat in June, when most of her peers were forecasting a stable or stronger exchange rate. “The renminbi was misaligned with fundamentals.”
While a weaker yuan looked inevitable to Trinh, the central bank’s decision to devalue the the currency on Tuesday took markets by surprise -- sparking a selloff in global equities and emerging-market currencies. Further weakness could exacerbate capital outflows, make $3 trillion of dollar-denominated debt more expensive for Chinese borrowers and put pressure on export rivals to devalue their own currencies.
“I see this going a lot further,” said Edwards, a global strategist at Societe Generale SA in London who’s been calling for a yuan devaluation for at least 18 months.
Trinh predicts the yuan will depreciate another 2.3 percent by year-end to 6.56 per dollar, while Lai at Daiwa Securities Co. has a target of 6.6, a level last seen in early 2011. The median estimate of 40 analysts surveyed by Bloomberg before the devaluation was 6.20, in line with the rate maintained by the People’s Bank of China for about four months before this week.
The PBOC’s daily fixing for the yuan fell by 1.1 percent on Thursday, after declines of at least 1.6 percent the previous two days. Under the new methodology, market makers who submit contributing prices for the reference rate have to consider the previous day’s close, foreign-exchange demand and supply, as well as changes in major currency rates.
The yuan weakened 0.3 percent to 6.407 in the spot market at 11:11 a.m. in Shanghai, extending its drop this week to about 3 percent. The PBOC will keep the yuan stable at a reasonable, equilibrium level, it said in a statement delivered ahead of a rare press briefing Thursday.
----“For almost a year people didn’t pay attention,” said Lai, Daiwa’s Hong Kong-based chief economist for Asia, excluding Japan. “The market in general still doesn’t understand how the exchange-rate policy in China works. It’s not about exports, it’s about money supply. If you have a lot of money coming in for 10 years, it has to leave at some point. And you can use your foreign reserves to protect your currency, but using that is too painful” as it drains yuan from the economy.
Lai said his forecast of a decline to 6.60 a dollar, which was made more than a year ago, may be reached “in the next few days,” and that there’s scope to revise it lower.
Chinese companies that borrowed in foreign currency at a record pace in the past three years will buy dollars to protect against losses, he said. In reports as early as March 2014, Daiwa outlined how fake export invoicing, metals purchases and disguised foreign investment had driven $1 trillion of hot money inflows.
“As the selling pressure increases, this could spin into a currency and a credit crisis,” he said.
China’s one-year sovereign bond yield has climbed 14 basis points since the devaluation, while the cost to insure the nation’s debt against default jumped to a two-year high.
----“We are far from fairly valued,” Trinh said. She predicts the yuan will drop to 6.95 a dollar by the end of 2016, a level last seen in May 2008.
More
http://www.bloomberg.com/news/articles/2015-08-13/who-s-crazy-now-yuan-bears-vindicated-by-tumble-see-more-pain
Yesterday we asked, just how bad are China’s real figures. Below, an indication of just how bad. And remember, even these figures are probably fake.
UPDATE 1-China July steel output falls 4.6 pct on yr -stats bureau
* Average daily steel output lowest since November 2014
* Jan-July output falls 1.8 pct to 476.04 mln T
* Steel mills may pick up production ahead of curbs in Beijing (Adds
background)
SHANGHAI, Aug 12 (Reuters) - Chinese crude steel output fell 4.6 percent
to 65.84 million tonnes in July from a year ago, government data showed on
Wednesday, as steel mills in the world's top producer faced tumbling prices and
faltering demand.
Average daily output stood at 2.124 million tonnes, down 7.6 percent
from June, its lowest since November 2014, according to Reuters calculations
based on data from the National Bureau of Statistics (NBS).
Softer demand caused by slowing Chinese economic growth has pushed steel
prices down 26 percent so far this year, plunging many mills into the red and
forcing them to cut output or ship more to overseas markets.
Growth in China's factory output, fixed-asset investment and retail
sales were all weaker than expected in July, adding pressure on Beijing to roll
out more measures to support the struggling economy.
Total output for the first seven months of 2015 dropped 1.8 percent to
476.04 million tonnes from the same period last year, NBS data showed.
But Beijing will shut factories to ensure clean air from Aug. 20 to
Sept. 3 during events to mark the 70th anniversary of the end of World War Two.
The measures may extend to neighbouring regions and could lead to a pick-up in
production beforehand.
Chinese large and medium-sized steel mills suffered aggregate losses of
21.68 billion yuan ($3.43 billion) from their core steel businesses in the
first half of this year.
More
And now comes this. The port is the tenth largest container port in the
world.
Explosion at Northern Chinese Port Leaves 17 Dead, Hundreds Hurt
August 12, 2015 — 7:12 PM BST
Updated on
Explosions rocked a hazardous-chemicals storage site in the northern
Chinese city of Tianjin, killing at least 17 people and disrupting operations
at one of the world’s busiest ports.
The late-night blasts Wednesday, which may have been the result of a
fire, spewed toxic material into the air and shattered windows in buildings for
kilometers around. China’s earthquake center said the biggest explosion was
equivalent to a 2.9-magnitude temblor.
Tianjin
is the world’s 10th-busiest container port and has become a gateway to
northern China for shipments of metal ore, coal, automobiles and crude oil. The
city of more than 15 million people features prominently in the government’s
push to develop the area around Beijing, 120 kilometers (80 miles) away, and is
home to manufacturing operations for foreign companies including Deere &
Co. and Caterpillar Inc.
----Some shipments will be disrupted at Tianjin port’s container and general cargo terminal, Wang Xiaolei, press officer at Tianjin Maritime Safety Administration, said by phone. The Tianjin maritime authority said that as of 11:22 a.m., vessels were not being allowed into the north part of the port near where the blast hit.
The first blast occurred at about 11:30 p.m., 40 minutes after a caller reported a fire had broken out at a logistics facility holding hazardous chemicals, the Ministry of Public Security said on its microblog.
Video footage purportedly from the scene showed giant fireballs rising into the air, towering over nearby buildings. The initial blast was followed by a mushroom cloud of smoke, generating an impact so intense it smashed windows of surrounding buildings and torched hundreds of vehicles stored nearby.
Makeshift building structures were leveled and stacks of shipping containers collapsed on vehicles parked nearby, according to pictures that the official People’s Daily posted on its Weibo account.
More
We end with soothing words from the PBoC. Who are you going to believe,
the PBoC or your lying eyes. China may hold the yuan’s decline for a few days,
but forever!
China central bank tries to soothe global markets, says no basis for yuan to fall further
As the yuan fell for the third straight day, the People's Bank of China (PBOC) said the country's strong economic environment, sustained trade surplus, sound fiscal position and deep foreign exchange reserves provided "strong support" to the exchange rate CNY=CFXS.
China's decision to devalue the currency on Tuesday by pushing its official guidance rate down 2 percent sparked fears of a "currency war" and roiled global financial markets, dragging other Asian currencies to multi-year lows.
It also drew accusations from U.S. politicians that Beijing was unfairly supporting its exporters.
The PBOC said at the time that the move was a one-off depreciation, but sources involved in the Chinese policy-making process told Reuters that powerful voices within government were pushing for the yuan to go still lower, suggesting pressure for an overall devaluation of almost 10 percent.
PBOC Vice-governor Yi Gang dismissed such talk as groundless.
More
"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."
Antony C. Sutton
At the Comex silver depositories
Wednesday final figures were: Registered 55.40 Moz, Eligible 116.70 Moz, Total
172.10 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, Google goes all silly and calls itself an
Alphabet. A rose is a rose is a rose comes to mind. As useless actions go in
the silly season, what also comes to mind is July 1979.
Back then, like President Nixon before him in
August 1971 during the Great Nixonian
Error of fiat money, President Carter was sulking for a week in Camp David,
fretting over his poor poll numbers, and causing the Washington apparatchiks to
have to unseemly shuttle back and forth.
On Wall Street everyone laughed, while everyone in the media thought Mr.
Carter was having a mental breakdown.
Then on July 15th he suddenly reappeared
on TV and delivered his now infamous “American Malaise” speech. Or at least
that’s what the wags in the media dubbed it due to its sad content. With his
poll numbers still not improving, three days later President Carter then
abruptly ordered the resignation of all of his Cabinet! Wall Street stopped
laughing and shot into panic mode.
With Wall Street in panic mode, President Carter
shot into panic mode too, and promptly reappointed all but 5 of his Cabinet.
Wall Street went back to laughing again. No one knows what they made of it in
Moscow, Beijing or Tehran. Like now, it was the silly season after all. Back
then, it was always the silly season in Moscow and Beijing.
Below, a review of Google’s silly season.
To change and change things for the
better are two different things.
German proverb.
Alphabet: Less Than Meets the Eye
The reorganization of Google into Alphabet means … well,
not very much, at least for now. Instead of everything being inside one big
corporation called Google, now there will be a bunch of corporations (one of
them called Google) all owned by a holding company called Alphabet. “Holding
company,” in this case, means that Alphabet will have no operations of its own:
it will be a corporation that simply owns all the other corporations.
This is supposed to have something to do with making the
company “cleaner
and more accountable,” “empowering great entrepreneurs and companies,”
“improving transparency and oversight,” blah blah blah. In itself, however, it
does none of this.
There is no substantive difference between a corporation with a bunch of divisions and a corporation fully owning a bunch of other corporations. In both cases, the CEO at the top of the pyramid has complete control over everything that happens within the entire structure, and is accountable to no one except the board and shareholders of the top-level corporation. As for transparency, there’s no rule saying that any corporation has to release audited financials, or have audited financials in the first place, or publish any financials at all (except for tax filings, which are not public). The rules requiring disclosures only apply to publicly traded corporations, and in the new structure, there is still exactly one of these: Alphabet, which still owns everything.
The new Alphabet is planning to release financial information
for its new Google subsidiary, but that’s purely voluntary — and it’s something
they could have done already. Any corporation always has the option of
disclosing more information than it is legally required to, and most public
corporations take this opportunity to release information that they think will
help them with their investors (if only because many investors are unwilling to
buy stock in companies that don’t say anything about how their numbers break
out across product lines or regions).
Alphabet’s subsidiaries will each have a CEO and, presumably,
a board of directors. This could be good, it could be bad, but most likely it
won’t make a difference. There’s no reason you couldn’t call the head of an
operating division its “CEO” instead of “president” or “general manager” as is
the case today. Nominally a corporation has to have a board of directors, but
in the case of an Alphabet subsidiary all of its members will be named by
Alphabet. So to the extent that the board does anything, it will be less
efficient than the current situation, in which Larry Page can simply call the
head of, say, Nest, and tell him what to do. And to the extent that a
subsidiary corporation duplicates any of the infrastructure that is currently
handled at the top, Google level (finance, HR, IT, etc.), that’s simply a
waste. However, the most probable outcome is that Alphabet will continue doing
what Google is doing today: the various subsidiaries will be semi-autonomous, doing
some things independently and drawing on shared resources for others.
----In short, the reorganization of Google into Alphabet
doesn’t change anything about how the company has to behave, so any actual
changes are things that could have been done without the reorganization. The
corporate structure will only really matter if investors can own stock directly
in the subsidiaries, so a subsidiary could have a different shareholder mix
from Alphabet. Then a host of new rules could apply, including required
financial disclosures on the subsidiary level and restrictions on transactions
between the subsidiary, Alphabet, and the other affiliates in the group. Then
the subsidiary would have to be run independently for the benefit of its
shareholders — which is good from its shareholders’ perspective, but bad from
the perspective of the conglomerate as a whole, because it limits flexibility.
More
We
trained hard to meet our other challenges but it seemed as if every time we
were beginning to form into teams we would be reorganised. I was to learn later
in life that we tend to meet any new situation by reorganising; and a wonderful
method it can be for creating the illusion of progress while producing
confusion, ineffectiveness and demoralisation.
Gaius
Petronius. Attributed.
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?
Discovery in growing graphene nanoribbons could enable faster, more efficient electronics
Date: August 11, 2015
Source: University of Wisconsin-Madison
Summary: Graphene, an atom-thick material with extraordinary
properties, is a promising candidate for the next generation of dramatically
faster, more energy-efficient electronics. However, scientists have struggled
to fabricate the material into ultra-narrow strips, called nanoribbons, that
could enable the use of graphene in high-performance semiconductor electronics.
Now engineers have discovered a way to grow graphene nanoribbons with desirable
semiconducting properties directly on a conventional germanium semiconductor
wafer.
Graphene, an atom-thick material with extraordinary properties, is a
promising candidate for the next generation of dramatically faster, more
energy-efficient electronics. However, scientists have struggled to fabricate
the material into ultra-narrow strips, called nanoribbons, that could enable
the use of graphene in high-performance semiconductor electronics.
Now, University of Wisconsin-Madison engineers have discovered a way to
grow graphene nanoribbons with desirable semiconducting properties directly on
a conventional germanium semiconductor wafer. This advance could allow
manufacturers to easily use graphene nanoribbons in hybrid integrated circuits,
which promise to significantly boost the performance of next-generation
electronic devices. The technology could also have specific uses in industrial
and military applications, such as sensors that detect specific chemical and
biological species and photonic devices that manipulate light.
In a paper published Aug. 10 in the journal Nature Communications,
Michael Arnold, an associate professor of materials science and engineering at
UW-Madison, Ph.D. student Robert Jacobberger, and their collaborators describe
their new approach to producing graphene nanoribbons. Importantly, their
technique can easily be scaled for mass production and is compatible with the
prevailing infrastructure used in semiconductor processing.
"Graphene
nanoribbons that can be grown directly on the surface of a semiconductor like
germanium are more compatible with planar processing that's used in the
semiconductor industry, and so there would be less of a barrier to integrating
these really excellent materials into electronics in the future," Arnold
says.
MoreThe monthly Coppock Indicators finished July
DJIA: +88 Down. NASDAQ:
+189 Down. SP500: +116 Down.
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