Baltic Dry Index. 1222 +22 Brent Crude 49.73
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“People say nothing is
impossible, but I do nothing every day.”
Mark Carney, with apologies to Winnie the Pooh.
We open with the USA and Japan splitting with Europe and the rest of the
world in blocking China at the IMF. We await China’s response with great
interest.
UPDATE 2-IMF staff urges no rush to add China yuan to currency basket
* IMF postpones move to add yuan to SDR basket to Sept 2016
* IMF board to review SDR basket and yuan inclusion in November
* IMF: reserve managers need 6 months' notice on SDR changes
* Analysts split over whether IMF likely to include yuan in SDR (Adds
analysts' comment in paragraphs 10 & 11)
WASHINGTON, Aug 4 (Reuters) - The International Monetary Fund should put
off any move to add the yuan to its benchmark currency basket until after
September 2016, IMF staff said in a report which showed a mixed performance of
the renminbi on meeting key financial norms.
The report, published on Tuesday, comes after Beijing launched a major
diplomatic push for the yuan to be added to the IMF's Special Drawing Rights
basket as part of its long-term strategic goal of reducing dependence on the
dollar.
The IMF board is scheduled to make a decision in November on whether to
include the yuan in a basket of currencies comprising dollars, euros, pounds
and yen, although the decision could be pushed back if policymakers decide they
need more information.
Delaying any change in the basket for nine months through September 2016
would avoid disrupting financial market trading on the first day of the new
year, the staff report said. A senior IMF official said reserve asset managers
would need about six months notice to adjust to a change.
The yuan, also known as the renminbi, meets the requirements as a
significant currency in terms of international trade, but also has to be judged
to be "freely usable", or widely used to make international payments
and readily traded on foreign exchange markets.
The report shows a mixed performance on financial criteria. Although the
currency is increasingly used in cross-border transactions and heavily traded
in Asia, it is only thinly traded in North America and is not commonly used in
international debt securities. Data was missing for some variables, the report
said.
---- Analysts interpreted the IMF delay
differently, with some inferring the IMF wanted to see a more freely traded
yuan before including it as a reserve currency. Others said the delay seemed
technical, aimed at giving the market more time to prepare.
"The IMF article implies a large likelihood of SDR inclusion -
otherwise the technical preparation would not be necessary," UBS economist
Wang Tao said in a note to clients.
IMF Managing Director Christine Lagarde has said adding the yuan to the
basket is a "question of when".
European members of the Group of Seven major industrialized economies - Germany,
Britain, France and Italy - favor adding the yuan to the basket quickly. Japan,
like the United States, is more cautious, officials have said.
More
Up next, Super Thursday at the Old Lady of Threadneedle Street. Shame
about the Greek “banks.” Minus 88 percent, coming soon to a stock exchange near
you, as the Great Bond Malinvestment Bubble 1981-2015 comes to its end! The
rout of the Great Nixonian Error of fiat money, communist money, kicks off in
September. Stay long unloved fully paid up physical precious metals. Time to
swap more pretty pictures of dead US Presidents, Mao, and Her Britannic Majesty
the Queen, for something of intrinsic value.
Super Thursday: Five Things to Watch Out For
August 6, 2015 — 5:01 AM BST
The Bank of England’s Monetary Policy Committee will release its August
interest-rate decision, minutes of the policy meeting and new economic
forecasts at noon in London. Governor Mark Carney will will hold a press
conference at 12:45 p.m.
That’s part of a new communications format under Carney and comes
against a backdrop of accelerating wage growth and the longest streak of
continued economic expansion since before the recession in 2008. Carney set the
tone for the event by saying last month the time for tighter policy was
approaching.
Here are five things to look out for from the Bank of England’s “Super Thursday.”
1. MPC Votes
The nine-member MPC has voted unanimously to keep the key interest rate at 0.5 percent for the past seven months. That’s about to change, with most economists seeing at least two voting for an increase on Thursday.The most commonly cited names are Ian McCafferty and Martin Weale, who voted for rate increases five times last year before abandoning the cause in January as inflation slid to zero. David Miles could also opt for tighthening, though this is his last meeting. More interesting would be if another member -- Kristin Forbes is sometimes mentioned -- joined the dissenters.
2. Inflation Forecasts
More
Greek Bank Stocks Are Getting Crushed for the Third Straight Day
August 5, 2015 — 8:45 AM BST
Greek banks extended a rout that has wiped out more than half their
value this week, sending the nation’s stocks lower for a third day.
Piraeus Bank SA and Alpha Bank AE plunged at least 29 percent, while
Eurobank Ergasias SA plummeted 15 percent. National Bank of Greece SA climbed
2.3 percent, rebounding after a 50 percent tumble in two days. While about half
of the 60 stocks listed on the benchmark ASE Index climbed, the lenders’ losses
dragged the gauge lower.
The ASE fell 1.4 percent to 651.02 at 10:43 a.m. in Athens, after
closing at its lowest level since September 2012 on Tuesday. The index tumbled
the most since at least 1987 on Monday, when the exchange reopened after a
five-week shutdown. An index of Greek banks has fallen to its lowest level
since at least 1995.
Trades have been hampered because of emergency curbs put in place amid
capital controls. A stock’s trading will be halted if it rises or falls by as
much as 7 percent in 10 minutes, while daily moves are limited to 30 percent.
Would-be buyers have to raise money from places other than their bank accounts.
----Greek
stocks have given up more than 88 percent of their value since 2007.
Asia shares drop, dollar firm; U.S. data signals September hike
Japan's Nikkei .N225 share average rose 0.7 percent at 0227 GMT while South Korea's Kospi reversed earlier gains to drop 0.7 percent.
Dollar-denominated MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slid 0.6 percent.
"Overseas money that would have been allocated to Asia is on the sidelines at the moment," said Khiem Do, head of multi-asset strategy at Barings Asset Management in Hong Kong. "In the short term, waiting to hear the timing and magnitude of that move has definitely put a little bit of dampener on U.S. stocks and some of the North Asian stock markets."
---- The U.S. Institute for Supply Management's services sector index rose to 60.3, its highest level since August 2005, far beyond expectations for a 56.2 reading.
The data backed views the Federal Reserve will raise rates in September,
more than offsetting weaker-than-expected U.S. private hiring figures for July
also published on Wednesday.
More
In commodities, the bad news just keeps getting badder,
except for those with an exceptionally sweet tooth.
Global sugar glut to grow as India prepares to flood the market with the sweetener
Prices have fallen to the lowest in six years and it looks like there's further to go
By Agencies 4:04PM BST 05 Aug 2015
Sugar producers hammered by the slump in global prices might be in for
further pain as the Indian government looks set to bring in rules to make it
compulsory for its own sugar mills to export millions of tonnes of surplus
supplies to support local prices.
The move could quell growing anger among farmers but add to a glut on
global markets, dashing hopes that prices might soon start to recover, sources
told Reuters.
A final decision rests with India's Prime Minister Narendra Modi, who
discussed the politically sensitive issue at a weekend meeting with ministers,
officials and sugar mill bosses, said the two government sources.
The proposal, which could mean mills selling at a loss, comes at time
when the world sugar market is grappling with a flood of supplies and prices at
six-and-a-half-year lows.
The mandatory export rule, which could be introduced from the start of
the next crop year on October 1, would apply only when output was higher than
local demand, said the officials, who are directly involved in formulating the
policy.
More
We close for the day with
the UK’s Daily Telegraph, April Fool’s joke of the week, and it isn’t even
April 1. If I didn’t know better, I might think that the Telegraph’s veteran
AEP had been WSJ, fracking, “Hilsenrathed.” But if AEP is right, $20 oil here
we come. Shame about Scottish independence. They better start being less racist
to their English benefactors.
"The freight train of North American
tight oil has kept on coming," said Rex Tillerson, head of Exxon Mobil.
Saudi Arabia may go broke before the US oil industry buckles
It is too late for OPEC to stop the shale revolution. The cartel faces the prospect of surging US output whenever oil prices rise
If the oil futures market is correct, Saudi Arabia will start running
into trouble within two years. It will be in existential crisis by the end of
the decade.
The contract price of US crude oil for delivery in December 2020 is
currently $62.05, implying a drastic change in the economic landscape for the
Middle East and the petro-rentier states.
The Saudis took a huge gamble last November when they stopped supporting
prices and opted instead to flood the market and drive out rivals, boosting
their own output to 10.6m barrels a day (b/d) into the teeth of the downturn.
Bank of America says OPEC is now "effectively dissolved". The
cartel might as well shut down its offices in Vienna to save money.
If the aim was to choke the US shale industry, the Saudis have misjudged badly, just as they misjudged the growing shale threat at every stage for eight years. "It is becoming apparent that non-OPEC producers are not as responsive to low oil prices as had been thought, at least in the short-run," said the Saudi central bank in its latest stability report.
"The main impact has been to cut back on developmental drilling of new oil wells, rather than slowing the flow of oil from existing wells. This requires more patience," it said.
One Saudi expert was blunter. "The policy hasn't worked and it will never work," he said.
By causing the oil price to crash, the Saudis and their Gulf allies have certainly killed off prospects for a raft of high-cost ventures in the Russian Arctic, the Gulf of Mexico, the deep waters of the mid-Atlantic, and the Canadian tar sands.
Consultants Wood Mackenzie say the major oil and gas companies have shelved 46 large projects, deferring $200bn of investments.
The problem for the Saudis is that US shale frackers are not high-cost. They are mostly mid-cost, and as I reported from the CERAWeek energy forum in Houston, experts at IHS think shale companies may be able to shave those costs by 45pc this year - and not only by switching tactically to high-yielding wells.
Advanced pad drilling techniques allow frackers to launch five or ten wells in different directions from the same site. Smart drill-bits with computer chips can seek out cracks in the rock. New dissolvable plugs promise to save $300,000 a well. "We've driven down drilling costs by 50pc, and we can see another 30pc ahead," said John Hess, head of the Hess Corporation.
He said the resilience of the sister industry of shale gas should be a
cautionary warning to those reading too much into the rig-count. Gas prices
have collapsed from $8 to $2.78 since 2009, and the number of gas rigs has
dropped 1,200 to 209. Yet output has risen by 30pc over that period.
Until now, shale drillers have been cushioned by hedging contracts. The
stress test will come over coming months as these expire. But even if scores of
over-leveraged wild-catters go bankrupt as funding dries up, it will not do
OPEC any good.
The wells will still be there. The technology and infrastructure will
still there. Stronger companies will mop up on the cheap, taking over the
operations. Once oil climbs back to $60 or even $55 - since the threshold keeps
falling - they will crank up production almost instantly.
With apologies to Winnie the Pooh.
At the Comex silver depositories
Wednesday final figures were: Registered 55.75 Moz, Eligible 117.66 Moz, Total 173.41
Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, US judicial activism on steroids. Uncle Scam
sets out to break the banks, as in foreign banks. Not to worry, no US based
bankster has yet been charged with bad behaviour, let alone convicted and
jailed. Something about a mote in one eye comes to mind.
U.S. judge finds 'viable' legal theory in Libor litigation
Aug 4 The U.S. judge overseeing private litigation accusing global banks
of manipulating Libor on Tuesday said she found a "viable legal
theory" that could justify relief for investors who claim they were harmed
by a conspiracy to rig the benchmark rate.
In a 431-page decision covering part of the litigation, U.S. District
Judge Naomi Reice Buchwald in Manhattan said the theory turns on what banks may
have disclosed to a London administrator who oversees the so-called London
Interbank Offered Rate.
Libor underpins hundreds of trillions of dollars of transactions, and is
used to set rates on credit cards, student loans and mortgages. It is
calculated based on submissions by banks that sit on panels.
Investors and regulators have accused big banks of suppressing Libor
during the financial crisis to boost earnings or make their finances appear
healthier.
"According to plaintiffs' allegations, each panel bank lied to the
Libor administrator about its own borrowing costs, knowing that entities such
as plaintiffs would rely on the accuracy of that information; as was to be
expected, plaintiffs then relied to their disadvantage, perhaps reasonably, on
this false information," Buchwald wrote. "If these allegations prove
true, then defendants' conduct was fraud."
Buchwald also said various banks may be able to recover from each other
should they be held liable. She has yet to decide whether punitive damages
should be available.
Tuesday's decision covers complaints filed under 28 separate court
dockets by individual plaintiffs who are not pursuing and do not want to join
class-action lawsuits.
Buchwald said all of the complaints may go forward, but she dismissed
some claims, and dismissed some bank defendants from six of the lawsuits.
MoreNext, step into the dock China. What part of intellectual property, doesn’t the Chinese mind understand? Theft is theft, is theft, although don’t expect any banksters or great vampire squids to get that message. But metal bashers, that’s just not cricket! Whatever next! Why we might soon have tiny coloured worthless pieces of steel passing as coins. Pieces of worthless printed paper passing as cash. Real scarce goods of value, time, and effort, exchanged for bankster promises to be “as good as gold.” Counterfeiting is counterfeiting, is counterfeiting, but not in our new lawless 21st century age.
This $21,700 Land Rover Lookalike to Go on Sale in China
August 4,
2015 — 11:00 PM BST Updated on August 5, 2015 — 1:52 AM BST
A sport utility vehicle that bears an uncanny resemblance to the Land Rover
Evoque will go on sale in China this week at a third of its sticker price.More than 5,500 people have put down deposits for the Landwind X7, which will be available in dealerships from Thursday at a starting price of 135,000 yuan ($21,700). The Evoque, which is Jaguar Land Rover’s best-selling model worldwide, retails from 398,000 yuan. Both models feature similar broad fenders, recessed door panels and a sloping roof.
Jaguar Land Rover Chief Executive Officer Ralf Speth railed at what he called the the rise of Chinese “copy-and-paste” jobs earlier this year at the Shanghai auto show, where the Landwind X7 was also on display. The carmaker said last year it was investigating whether Landwind copied design elements of the Evoque.
“Customers say the car is good-looking, like the Evoque,” Zhu Jianfeng,
a sales manager at Ninghai Landwind Specialty Store, a dealership that stocks
the X7, said by phone. “The price is attractive too.”
The concern is that a cheap lookalike will make it harder for Jaguar
Land Rover to command a premium for its model, especially as automakers step up
discounting and offer cheaper variants to bolster sales in a softening market.
The British premium carmaker, owned by India’s Tata Motors Ltd., has cut its
prices and sales targets in China as deliveries there slumped 27 percent this
year through June.
Asked to comment on
the X7, Jaguar Land Rover said it takes protecting its intellectual property
“very seriously,” declining to go into specifics. Jiangling Motors Co., which
owns Landwind, referred questions about the X7 to its unit. Calls to Landwind’s
main line and customer service hotline went unanswered.
More
“Graeme's
clever," said Carney thoughtfully.
"Yes," said Osborne, "Graeme's clever."
"And he has Brain."
"Yes," said Osborne, "Graeme has Brain."
There was a long silence.
"I suppose," said Carney, "that that's why he never understands anything.”
"Yes," said Osborne, "Graeme's clever."
"And he has Brain."
"Yes," said Osborne, "Graeme has Brain."
There was a long silence.
"I suppose," said Carney, "that that's why he never understands anything.”
With
apologies to Winnie the Pooh.
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?
Study claims perovskite solar cells can recoup their energy cost within three months
Scientists at Northwestern University and the U.S. Department of Energy have found that perovskite cells, one of the most promising solar technologies of recent years, can repay their energy cost over 10 times faster than traditional silicon-based solar cells. The finding confirms that, once issues related to cell longevity are ironed out, perovskite cells could soon bring us solar energy on the cheap, and do so with less impact on the environment over their lifetime.Solar panel installations are doubtlessly having a positive impact on the environment, but quantifying their carbon footprint with some degree of precision – which is useful for comparing them to other means of energy production, including other renewables – is not a straightforward process. To get a more complete picture, it's important to consider not only the carbon emissions saved during the panel's operating life, but also the amount of energy that goes into materials processing, manufacture, repair, maintenance and, once it is no longer useful, disposal of the panel.
According to this metric, called the cradle-to-grave life cycle assessment, a typical solar panel takes a fairly long time, between two and three years, to offset the energy costs that went into producing it.
This is because silicon-based solar panels must be manufactured inside a clean room using
high-purity crystalline silicon wafers that can only form inside specialized high-temperature furnaces.
Scientists at Northwestern University have now calculated that, by contrast, perovskite-based solar cells have an energy payback time (EPBT) of only two to three months. According to the researchers, this is not only much faster than a silicon-based cell, but also significantly better than any other type of commonly available solar cell.
Perovskite cells are the fastest-growing technology in the solar arena.
Although they aren't quite as efficient at converting sunlight into electricity
as silicon-based cells, they are catching up very quickly. More importantly,
they are much cheaper to produce than normal panels, meaning that their
commercialization could lead to a drastic drop in the cost of clean
electricity.
Unlike traditional silicon-based cells, perovskites can be manufactured
at a very low energy cost, without the need for sophisticated equipment, and in
very few steps. A solution containing the electrode materials is coated onto a
substrate and, once it evaporates, this solution produces dense layers of
crystallized perovskite at a fraction of the cost and energy expenditure of
other common solar panels.
MoreA paper describing the study appears in the latest issue of the journal Energy & Environmental Science.
Source: Northwestern University
The monthly Coppock Indicators finished July
DJIA: +88 Down. NASDAQ:
+189 Down. SP500: +116 Down.
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