Baltic Dry Index. 1046 -47 Brent Crude 49.18
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“The
Federal Reserve is not currently forecasting a recession.”
Bernocchio, January 10, 2008.
Bernocchio, January 10, 2008.
It is 6 a.m. as I write and all’s well in the world again. China has
confirmed it has no secret plan to drive down the Yuan to steal global export
orders from Japan and Germany, and reduce imports from the rest of the world.
What a relief!!! For a moment there, earlier in the week, it certainly looked to
me like China was deliberately engineering the Yuan lower and joining in the
rampant currency wars alongside, Japan, South Korea, the ECB, and all the rest.
Now we all know, China is innocent of
such international dishonesty. Found innocent by China itself. Silly me!
Below, the UK’s Telegraph cover China’s mea culpa.
China denies currency war as global steel industry cries foul
Industries across the world are bracing for a deflationary shock as China devalues, but Beijing adamant there is no secret plan to drive down the yuan
Chinese steelmakers are preparing to flood the global market with cut-price exports as they take advantage of this week’s shock devaluation of the yuan, setting off furious protests from struggling competitors in Europe and the US.It is the first warning sign of a deflationary wave of cheap products from China after the central bank, the People's Bank of China, abandoned its exchange rate regime, letting the currency fall in the steepest three-day drop since the country emerged as an economic powerhouse. The yuan has fallen 3.3pc against the dollar, closing at 6.3989 on Thursday.
Steel mills in the Chinese industrial hub of Hebei have already begun to trim prices of rebar mesh-wires used for building by between roughly $5 and $10 to $295, citing the devaluation as a fresh chance to offload excess stocks of steel.
Europe’s steel lobby Eurofer warned that there would be “very real competitiveness impacts” for European steel firms, already battling for their lives with wafer-thin margins.
America’s United Steelworkers accused China of predatory practices."It is time for China to live by the rules or face the consequences," said the union's international president, Leo Gerard.
The US steel group Nucor called the devaluation the “latest attempt to
support Chinese industry at the expense of producers in the rest of the world
who have to earn their cost of capital to survive.”
Indian tyre-makers have issued their own warnings, fearing a fresh rush
of cheap imports from China. They are already grappling with a 100pc surge in
shipments over the last year as the recession in China’s car industry displaces
excess supply.
----China’s share of global steel output has rocketed from 10pc to 50pc over the last decade. It has installed capacity of 1.1bn tonnes a year that it cannot possibly absorb as the Chinese economy shifts away from heavy industry.
It now has 340m tonnes of excess capacity, which has driven down global steel prices by 40pc since early 2014. “This overcapacity alone is more than double the EU's steel demand, and China is now exporting record quantities to Europe as a result,” said Eurofer.
The European Commission said it is the monitoring situation closely. It imposed anti-dumping penalties on Chinese stainless steel in March following a 200pc jump in Chinese imports in 2014.
It opened a parallel probe of rebar imports in April, one of a long list of anti-dumping investigations cases ranging from Chinese solar panels to silicon, aluminium foil, molybdenum wires, and aspartame.
----The eurozone is in an odd position complaining about China’s exchange rate. The euro has fallen by 20pc since April 2014, and at least part of this was engineered through quantitative easing.
Whatever the rights and wrongs of this saga, the Chinese authorities
themselves know that a concerted effort to weaken their currency could set off
serious capital flight.
More
Back in the real world, Beijing
based Lenovo hits the buffers. US based private equity gets high on hopium.
Global deflation is our future for the next few years.
Lenovo faces Motorola hangover, cuts 3,200 jobs as sales slide, profit tumbles
Shares in the world's biggest maker of PCs slid nearly 9 percent on Thursday after it said its quarterly net profit was halved as its mobile division lost nearly $300 million. Lenovo, which uses the U.S. dollar in operations rather than the recently devalued Chinese yuan, said it plans to cut about 3,200 non-manufacturing jobs with a one-time cost of $600 million.
Beijing-based Lenovo said the restructuring would yield savings of about $1.35 billion on an annual basis. But the difficulty in selling handsets, combined with a continuously shrinking global market for PCs, meant the firm was facing its "toughest market environment in recent years", Chief Executive Yang Yuanqing warned.
-----Motorola, bought from Google Inc (GOOGL.O) last year for $2.91 billion, shipped 5.9 million handsets in the quarter, a 31 percent decline from a year earlier. Yang cited poor sales in Brazil and China, saying Lenovo would prioritize marketing smartphones outside its home turf, where market saturation and price wars have hobbled firms from Samsung Electronics to domestic startup Xiaomi Inc [XTC.UL].
At 0600 GMT, Lenovo shares were down 8.7 percent, hitting their lowest level since late February 2014.
More
Oil Set for Longest Weekly Slump Since January as Glut Persists
August 14, 2015 — 1:17 AM BST Updated on August 14, 2015 — 6:40 AM BST
Oil headed for the longest run of weekly declines since January amid signs
the global glut that’s driven prices to the lowest in six years will be
prolonged.Futures dropped as much as 2.1 percent in New York on Friday, and are down 4.2 percent this week. The market surplus will last through 2016, the International Energy Agency said Wednesday, while OPEC reported that output climbed last month to the highest level in more than three years. A measure of price fluctuations is poised for a second weekly advance amid mixed demand signals from China.
Oil has slumped more than 30 percent from its June closing peak as leading members of the Organization of Petroleum Exporting Countries maintain output. China’s record imports in July boosted speculation that sustained buying may alleviate a glut, while further devaluation of its currency raised concern that its economy and demand are slowing.
“It’s the ongoing supply that is causing the major worries,” Michael McCarthy, a chief strategist at CMC Markets in Sydney, said by phone. “Statements from OPEC of their increased production is clearly weighing on the price, while focus has turned to Chinese growth.”
West Texas Intermediate for September delivery was at $41.98 a barrel on the New York Mercantile Exchange, down 25 cents, at 1:25 p.m. Singapore time. The contract declined $1.07 to $42.23 on Thursday, the lowest level since March 2009. The volume of all futures traded was 56 percent above the 100-day average. Prices have decreased 21 percent this year.
More
U.S. shale firms turn to private equity as market funding tails off
Throughout much of the crude market rout that started in mid-2014 oil firms could rely on generous capital markets investors betting on a quick recovery in prices, which made any asset sales look unattractive. But since crude prices began tanking again in early July after a partial three-month recovery, oil firms have finally started to feel the squeeze.
A torrent of $44 billion in high-yield debt and share sales in the first half of this year has slowed to a trickle with oil now at just above $42 a barrel, 30 percent below its June levels and 60 percent down from June 2014, CLc1 and a more pessimistic view taking hold that global oversupply could keep oil cheap for years.
The number of high-yield bond and share issues has tumbled more than two-thirds from levels seen in May, Thomson Reuters data show. (link.reuters.com/fyf45w)
That opens up opportunities for deep-pocketed private equity firms to push for restructuring or buy assets as many oil companies need cash to replenish banks' slimmed-down lending facilities, service their bonds and finance drilling of new wells to keep pumping oil and sustain cash flow.
“The capital markets showed up in force in the first quarter much to everyone's surprise," said Carl Tricoli, managing partner at Denham Capital, a private equity fund in Houston.
"It didn't solve people's problems, so now when you roll to 2016 ...there will be an opportunity for private equity-backed companies with plenty of capital in place to go out and start buying."
On Monday, shale producer Magnum Hunter Resources Corp. (MHR.N) said it would get an unnamed private equity fund to pay for up to $430 million of drilling work in Ohio in return for rights to the land.
Dealmakers say potential sellers of oilfield assets are now discussing bids they would have rejected a few months ago while the changed outlook for oil allows buyers to adjust bids down.
"I've had two deals impacted by the $55 to $45 dollar (a barrel) shift," said Steve Tredennick, a partner at the Paul Hastings law firm in Houston. "It was enough of a change, and enough of a psychological change, that on the buy side, you simply had to reprice."
While crude's retreat means more pain for oilfield companies, private
equity firms, with their high risk tolerance and longer investment horizon, are
prepared to make deals that may take years to pay off.
Optimists believe in the longer run oil prices will return to around
$100 a barrel thanks to new demand fueled by a growing middle class in the
developing world.
Natural resources-focused private equity funds
raised about $28 billion in the first half of the year, compared with $20
billion in all of 2014, according to market research firm Preqin.
More
A newspaper [TV] is a device
for making the ignorant more ignorant and the crazy crazier.
H. L. Mencken.
At the Comex silver depositories
Thursday 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.
Below, wanna get in on the next big thing? “No
after you! No, no, no after you!”
I was borrowing money
from 30 leading banks. How could they all be wrong? I’m only a simple
businessman.
Sir Freddie Laker.
Sir Freddie Laker.
Tesla Files to Sell 2.1 Million Shares to Raise $500 Million
By Dana Hull
August 13, 2015 — 12:16 PM BST Updated on August 13, 2015 — 2:50 PM BST
Tesla Motors Inc., the maker of luxury electric cars, filed to offer 2.1
million shares to raise about $500 million to expand the business beyond the
addition of a sport utility vehicle next month.
The company said the proceeds, which may reach $566.5 million if
underwriters fully exercise their option to purchase additional shares, will be
used to expand the company’s retail operations, charging network and
energy-storage business as well as to develop the world’s largest battery
factory and a more-affordable electric car called the Model 3, according to a
filing with the Securities and Exchange Commission.
“They are raising capital to fund growth, which is a good thing,” said
Dan Dolev, an analyst with Jefferies LLC.
The offering gives a bit more of a cash cushion to the smallest and
youngest publicly held U.S. automaker, which faces huge capital expenditures to
expand globally and triple its vehicle lineup.
Chief Executive Officer Elon
Musk said last week that the company may raise equity capital “as a
risk-reduction measure.” Tesla stock rose 1.3 percent to $241.20 at 9:49 a.m.
New York time.
The shares slid 16 percent through Wednesday since closing at $282.26 on
July 20, the first trading day after announcing a “Ludicrous Mode” option that
could take a Model S sedan from zero to 60 miles (97 kilometers) per hour in
2.8 seconds. Musk introduced the brand’s first sales incentive on July 29 and
on Aug. 5 said that deliveries may fall 10 percent short of the original goal
if suppliers can’t deliver needed parts in time.
----Tesla raised $226 million in its June 2010 initial public offering, the first IPO for a U.S. automaker in a half century. In May 2013, the company raised $1.08 billion in equity and debt offerings, a move that allowed it to repay its $465 million Energy Department loan nine years ahead of schedule. In February 2014, Tesla borrowed $2.3 billion more in convertible debt to help finance the so-called gigafactory that it’s building near Reno, Nevada. In June, Tesla obtained a credit line of as much as $750 million.
Musk has been candid about Tesla’s capital expenditures and lack of
profitability. Increasing battery production and developing new models will
require billions in investments and delay consistent profitability.
During an auto-industry event in January, Musk said the company might
become profitable on a net basis by 2020, when annual sales reach 500,000.
More
For every complex problem there is an answer that
is clear, simple, and wrong.
H. L.
Mencken.
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?
Below, there’s more
than one way to skin a cat.
Solar Film Covers Windows of Coca-Cola Building
The Coca Cola headquarters in Brussels, Belgium, was retrofitted with Umisol Infrared Blocking Filter on its windows. The Umisol solar film helps keep the facility cool in the summer and warm during the winter, and the energy efficiency will help the company reduce its emission. By 2050 the European Union aims to reduce emissions by 80-95 percent compared to 1990.The European Commission’s plan regarding energy focuses on instruments to get the renovation process for public, commercial and private buildings underway and to improve the energy performance of the components used in those buildings. Improving window glazing with Umisol IR Filters is one such opportunity.
The existing windows in the Coca-Cola building were double glazed. To improve the solar gain value, Umisol installed its coated IR film on the 510 windows for a total of 1,660 square meters for the price of $111,116.
http://www.energymanagertoday.com/solar-film-covers-windows-coca-cola-building-0114566/
Why install Umisol® window film?
- The highly reflective properties of the window film lower temperatures. You soon find you’ve saved up to 25% on your cooling costs.
- In winter, the heat you generate is kept inside, resulting in increased thermal insulation and saving up to 30% on your heating costs.
- Reduced CO2 emissions (greenhouse gas). You contribute to reducing your ecological footprint.
- Fast return on investment (ROI).
- No UV discoloration of your interior furniture and fittings.
- Extra protection against burglary and injuries from broken glass.
- The window films admit visible light. No extra lighting is required.
- Improved comfort.
The sustainable solution in window insulation
Umisol® window films provide effective sunlight protection in summer and energy-efficient thermal insulation in winter, plus a high level of light transmission. These foils keep out the summer heat but let in the light, while their insulating effect reduces heat loss through the windows in winter.You save energy throughout the entire year and enjoy optimal comfort in both summer AND winter. Refreshing coolness in summer and pleasant warmth in winter.
Installing Umisol® window film is easier and faster than replacing windows and is achieved without cutting or breaking. It also creates less mess.
The extremely low thermal absorption means that this window film can also be installed on any kind of glass, even slanting panels.
These intelligent window films reflect 99% of UV rays, preventing discoloration of your valuable interior.
The quality foil also provides greater security. Glass is a breakable building material and the slivers can cause serious injury. Large areas of glass in buildings are also very appealing to burglars. Umisol® window films strengthen the surface of the glass and ensure that any broken pieces do not fall out and injure you. Your windows can be maintained and cleaned as usual.
Umisol® window film comes with a 10-year guarantee. However the life span of this insulating window film is much longer. Accelerated ageing tests by test bureau indicate that Umisol® glass foils have the same appearance and sun-protection and insulating properties after 20 years. All technical specifications of Umisol® window film have been tested according to the applicable EN standards.
Another weekend, and we can all sleep easily in our beds. From China’s
mouth to our ears, China is not going to devalue the Yuan and export deflation
to the world. Rush down to the bank to
borrow like a drunken Chinese Princeling. Open more factories, build more malls
and empty cities. The future is 2002-2007, says China, not 2008-2009. Why would
China lie. Have a great weekend, but swap some paper for some physical precious metals, just in case.
It is hard to believe that a
man is telling the truth when you know that you would lie if you were in his
place.
H. L. Mencken.
The monthly Coppock Indicators finished July
DJIA: +88 Down. NASDAQ:
+189 Down. SP500: +116 Down.
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