Baltic Dry Index. 1031 -15 Brent Crude 46.95
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Public calamity is a mighty leveller.
Edmund Burke.
Today it’s all about when. When will the crooked Fedster’s raise the
talking chair’s key interest rate? It doesn’t look likely next month. When will
the IMF allow the Yuan into their Special Drawing Rights basket of reserve
currencies? Next year at the earliest if Uncle Scam relents. When will the
collapsing price of crude oil hit bottom and how low? Next year is my guess and
in the mid-twenties. When will China contagion finally end and how bad will the
Asian flu be? More on that below in Crooks Corner.
Having already lost the front tyres and driving on rims, and with the
China rear driving tyre rapidly deflating, and the EUSSR spare clapped out and
unfit for purpose, when will the global economy lose all forward momentum? When
will the Great Reconnect between stock markets and the new reality kick in? I
think it started with the Great Chinese stock market bubble bust back in July.
Below, when central banksters become irrelevant.
Asian shares slide; dollar loses edge on Fed minutes
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 0.9 percent with all markets in the region except New Zealand posting declines.
Hong Kong's Hang Seng Index .HSI hit an 8-month low while Singapore-listed shares .FTSTI fell to 1 1/2-year lows. Malaysian shares .KLSE sank to three-year lows.
Mainland Chinese shares .SSEC also dropped 1.2 percent while Japan's Nikkei .N225 fell 0.7 percent.
"Markets are nervous of risks and investors are pulling funds out of emerging economies and resource exporters," said Daisuke Uno, chief strategist at Sumitomo Mitsui Bank.
Fears that Chinese growth, which carried the global economy following the 2008 international financial crisis, is slowing in the long term are affecting the outlook for many industries, with the commodities sector among the hardest-hit.
U.S. crude oil prices CLc1 eased 0.8 percent after a fall of more
than 4 percent on Wednesday following an unexpectedly large increase in U.S.
stockpiles, barely holding above its 6 1/2-year low of $40.40 per barrel.
It last stood at $40.47, with a break below $40 seen as likely to
trigger a fresh wave of selling.
Brent crude futures LCOc1 fell 0.6 percent to $46.90, edging near the
six-year low of $45.19 touched in January.
More
IMF freezes benchmark currency basket, defers any yuan addition
The International Monetary Fund said on Wednesday it will freeze its
benchmark currency basket until October 2016, giving markets more time to
adjust to the possible addition of China's yuan as part of a review of global
reserve currencies.
The IMF board is scheduled to decide in November whether the yuan will
join the Special Drawing Rights basket.
Beijing loosened government controls on the yuan this month, allowing
its value to fall sharply. The IMF saw the policy shift as a step toward a
freer exchange rate, potentially setting the stage for the yuan to become part
of the SDR basket.
The decision announced in a statement on Wednesday, however, would defer
the implementation of any move to include the yuan.
Beijing, keen for its currency to have equal billing with the euro, yen,
pound and dollar, has been pushing for the yuan to be included in the SDR
basket, which determines the mix of currencies that countries like Greece
receive as IMF disbursements.
To be included in the SDR basket, IMF policymakers must decide the yuan
is "freely usable," or widely used to make international payments and
widely traded in foreign exchange markets.
---- An IMF staff report released earlier this month, which recommended extending the basket, showed that 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.
Staff said freezing the current basket, which had been due to expire on
Dec. 31, would give parties more lead time to adjust to any changes.
Chinese Premier Li Keqiang in March asked IMF Managing Director
Christine Lagarde to push for inclusion, saying Beijing would speed up the
convertibility of the yuan and liberalize cross-border investment rules.
Lagarde has said adding the yuan to the basket is a "question of
when."
More
Oil Cash Slump Triggers New Risks at World’s Biggest Wealth Fund
August 19, 2015 — 12:25 PM BST
The sudden slowdown in capital flows into the world's biggest sovereign
wealth fund will add to risks and make it more costly to adjust its strategy,
its chief executive officer said.
As crude has plunged below $50 a barrel, Norway's fund has seen a precipitous drop in cash injections from the government. It received just 12 billion kroner ($1.4 billion) in the second quarter, compared with an average of 60 billion kroner over the past 10 years.
As crude has plunged below $50 a barrel, Norway's fund has seen a precipitous drop in cash injections from the government. It received just 12 billion kroner ($1.4 billion) in the second quarter, compared with an average of 60 billion kroner over the past 10 years.
``We still have a net positive inflow, although it's very small these
days,'' Yngve Slyngstad, head of the fund, said in an interview in Oslo on
Wednesday. While it won't immediately change its strategy, the fund won't have
``the same amount of cash to reinvest,'' he said.
The wealth fund has typically used new cash to make large changes in its
portfolio, such as when it went into real estate or increased its stake in
emerging markets while cutting Europe. The fund is dealing with smaller capital
injections as it targets adding infrastructure to its portfolio of approved
asset classes. It also wants to raise its allocation to real estate.
According to Slyngstad, the decline in cash has already hampered to
fund's shift away from Europe. The government in 2012 approved a plan to reduce
holdings in Europe to 41 percent from 54 percent of the total portfolio as the
region's debt crisis raged.
``The big picture is that we will see a bigger relative risk and
somewhat larger implementation costs during strategy changes now,'' Slyngstad
said at an earlier briefing.
The fund posted a loss of 73 billion kroner in the second quarter, the
first decline in three years, dragged down by falling global bond and stock
markets.
We end with the EUSSR, where in
business as usual, staying in the spoils of power trumps doing what’s right.
Greece to trouble euro zone for decades: Finnish foreign minister
Greece will be a headache for the euro zone for decades, Finland's
eurosceptic foreign minister said, and called for the International Monetary
Fund to participate in the Greece's new bailout package.
"Unfortunately, this problem will be in front of us for decades, I
would say, if the euro zone stays together," foreign minister Timo Soini
said in an interview with public broadcaster YLE on Monday.
IMF's participation in the new 86 billion-euro bailout is uncertain
because the fund demands debt reliefs to ease the burden on Greece.
"An absolute debt cut, I think, is out of question, Germany too is
against it ... On other issues (maturities, interest rates) we must
negotiate," Soini said.
"IMF's participation would also strengthen the expertise in the
package, so that the programs will actually be carried out by Greece."
The Finnish parliament's grand coalition last week approved the bailout
deal.
Soini's nationalist the Finns party is known for opposing euro zone
bailouts but had to support the new Greek deal to be able to keep a seat in the
coalition government which it joined in May for the first time.
"I still think bailout policy is bad policy ... But in politics,
one must make unpleasant decisions," he said.
"If the EU cannot resolve a small problem the size of Greece, what is the point of Europe?"
Romano Prodi, former chief of the European Commission, former Italy Prime Minister.
At the Comex silver depositories
Wednesday final figures were: Registered 55.87 Moz, Eligible 115.08 Moz, Total
170.95 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, China sneezes and everyone else catches flu.
Can commodity giant Glencore survive?
Chinese slowdown sends ripples across Asian banks
Asian lenders are seeing their loan books rapidly deteriorate across the
region as China's slowing economy dampens trade and hurts companies that had
borrowed heavily from the banks.
Among 23 major non-Chinese lenders, all but 6 reported an increase in
soured loans in the first half of 2015, the strongest indication yet of how
China's slowdown is infecting banks' balance sheets, data compiled by SNL
Financial for Reuters show.
That trend accelerated in the second quarter, the banks' data show.
"Second-quarter results have seen banks across Asia suffer rising
bad loans after a period of historic lows in NPL levels," said Josh
Klaczek, JPMorgan head of Asia financials research.
"China's slowing growth has particularly hit shorter duration
trade-related loans, but is likely to have a broader impact on commodity
credit, given its importance as an end-user."
The data indicate how banks regionwide are suffering even when, like in
Indonesia, they are not lending much directly to Chinese companies, as trade
across Asia stutters.
Indonesian banks saw provisions against bad loans as much as triple in
the first half of 2015.
"Most of the Indonesian banks said their increasing non performing loans
(NPLs) are because of the mining and construction sectors, which have been hit
the most by slowing demand from China," said analyst Syaiful Adrian at
Ciptadana Securities.
MoreShares in Glencore tumble as commodities rout hits
A commodity price meltdown has drained the FTSE 100-listed miner's profits and forced it to review its capital expenditure plans
Mining giant Glencore is the newest casualty of a global rout in oil
prices, as the FTSE 100-listed miner reported a profit slump, sending the
shares tumbling nearly 9pc on Wednesday.
Adjusted EBITDA - earnings before interest, taxes, depreciation, and
amortisation - fell by 29pc to $4.6bn in the first half of the year.
---- The slide in oil prices has forced
the miner to drop its targeted capital expenditure for this year to just $6bn,
from a previously announced target range of $6.5bn to $6.8bn. Glencore intends
to cut capital expenditure further, to "no more" than $5bn in 2016.
Glencore's boss conceded that the first half "was another
challenging one for commodities". He continued: "Financial markets
continued to fixate on the risks to global growth, against a backdrop of a
stronger US dollar."
---- Mr Glasenberg assured investors that Glencore remains "by far the
most diversified commodity producer and marketer and are well positioned to
benefit from any improvement in pricing when it finally and inevitably
materialises". Glencore's net income fell to $882m in the first half, less than half the $2.01bn posted in the same period a year earlier. Yet the drop was less severe than anticipated, with analysts surveyed by Bloomberg predicting a fall to just $711m in the first six months of 2015.
Glencore is also mulling shutting down its Eland platinum mine in South Africa because of the falling price of the previous metal
More
Glencore Blames ‘Aggressive’ Short Sellers for Copper Plunge
August 19,
2015 — 3:10 PM BST
Aggressive, synchronized short selling, especially from leveraged Chinese
hedge funds, has pushed copper prices too low, according to Glencore Plc.Indicators of supply and demand suggest prices should be higher, the company said in its earnings statement on Wednesday. Mine disruptions from Chile to Zambia mean producers aren’t delivering as much metal as expected, and mining companies may cut production if prices fall further, Glencore said.
“The actual physical flows, the inventory levels are not justifying the prices where they are today,” Chief Executive Officer Ivan Glasenberg said on a conference call. “It’s hedge funds, it’s Chinese hedge funds, it’s U.S hedge funds. They’re all just hitting the commodities at the moment.”
The plunge in copper is hurting companies like Glencore, which reported a 56 percent drop in first-half profit and cut the earnings forecast for its trading division. Copper is down 20 percent this year as China’s slowing economy means less metal is required for construction and manufacturing.
Bearish speculators have piled into the metal and wagers betting on further declines are at the highest on record, U.S. Commodity Futures Trading Commission data show.
“You can’t fight against the flow of money,” Glasenberg said.
Prices fell below $5,000 a ton this week for the first time since 2009 and about a fifth of mines are now losing money, Macquarie Group Ltd. estimates.
A growing proportion of miners are struggling with prices this low, Glencore said in its earnings release. Production cutbacks are inevitable in a “doomsday scenario” of prices falling to about $4,400 a ton, Glasenberg said.
“You start to see copper getting down to certain levels, you’re going to see a lot of production cuts,” Chief Financial Officer Steve Kalmin said Wednesday. “That feeds through to the system. There’s going to be no copper around in 12 months’ time.”
----“Oversupply, undersupply all depends on demand in China,” Glasenberg said on a conference call. “That’s the one that we’re all struggling to read.”
More
Glencore CEO: China Is a Lot Weaker Than Anyone Expected
August 19, 2015 — 8:09 AM BST Updated on August 19, 2015 — 5:44 PM BST
Glencore Plc Chief Executive Officer Ivan Glasenberg said no one can
read the Chinese commodity market.
It’s getting harder to predict metals consumption in China, the world’s
biggest user of raw materials, the billionaire CEO said in a phone interview in
London. Glencore reported a 56 percent plunge in first-half profit on Wednesday
and cut the earnings forecast for its trading division.
“At the moment none of us can read China,” said the 58-year-old South
African who’s the second-largest shareholder in the company. “None of us know
what is going on there and I’m yet to find the guy who can predict China
correctly. China in the first half was a lot weaker than anyone expected.”
Glasenberg, who ran a large part of Glencore’s business with China from
Hong Kong in the 1990s, is steering the company through the strongest headwinds
since the Swiss commodity trader’s $10 billion initial public offering four
years ago. Glencore outlined further reductions in capital spending in its
earnings report, and is reducing debt in an effort to maintain dividends while
preserving an investment-grade credit rating.
Glencore shares sank 9.7 percent to a record low of 158.95 pence in
London. The stock has slumped 70 percent since its 2011 IPO, hurt by China’s
slowest economic growth in a quarter of a century and raw-material prices at a
13-year low.
More
Europe Stocks Drop as Emerging-Market Losses Spread; Gold Rises
August 19,
2015 — 12:11 AM BST Updated on August 19, 2015 — 1:41 PM BST
The selloff in emerging markets spread to Europe, sending stocks lower
for the first time this week. U.S. equity-index futures retreated and gold
rose.
Exporters led declines as a slowdown in China and weakening currencies
in developing economies threatened earnings, while the outlook for the Federal
Reserve’s first interest-rate increase since 2006 hurt demand for riskier
assets. Vietnam and Kazakhstan devalued their currencies as the fallout
continued from China’s decision last week to allow the yuan to depreciate.
----Malaysia’s ringgit and Taiwan’s dollar led declines in currencies
while exchange rates for commodity producers including Russia and South Africa
rebounded. Asian and commodity-linked currencies have borne the brunt of
declines since the yuan was ratcheted lower.
Turkey’s lira weakened as much as 1.1 percent to 2.9263 per dollar. The
currency fell to a record for a fifth day following an explosion in Istanbul
and as Turkey’s central bank indicated it won’t raise borrowing costs before
the U.S.
Kazakhstan allowed the tenge to slide the most since a devaluation 18
months ago, signaling Central Asia’s biggest crude producer wants to adjust to
declines in the currencies of China and Russia, its top trading partners. The
currency dropped 4.4 percent to 197 per dollar.
More
"The
international monetary order is more precarious by far today than it was in
1929. Then, gold was international money, incorruptible, unmanageable, and
unchangeable. Today, the U.S. dollar serves as the international medium of
exchange, managed by Washington politicians and Federal Reserve officials,
manipulated from day to day, and serving political goals and ambitions. This
difference alone sounds the alarm to all perceptive observers."
Hans F. Sennholz
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?
Graphene Just The Tip Of The 2D Materials Iceberg For Clean Technology
August 17th, 2015 by Tina CaseyNo, we’re not ready to quit graphene, but the field of super-exciting 2D materials is getting rather crowded these days. That’s good news for a laundry list of desirable items of the future, including solar energy, wind energy, energy storage, and electric vehicle batteries. Lighter-smaller-faster-cheaper is the name of the game, and the use of nontoxic, abundant materials is a plus.
With that in mind, let’s take a look at two new developments that could nudge conventional silicon semiconductors aside and spark a whole new clean technology revolution, if and when they finally go bounding out the laboratory door.
Graphene Rival #1: Molybdenum Disulfide
For those of you new to the topic, molybdenum disulfide belongs to an unusual family of semiconductors called TMDCs, which stands for transition metal dichalcogenides (molybdenum is a brittle metal often used to make steel alloys).TMDCs have been called “ideal building blocks” for atomically thin electronic and catalytic devices — if only anybody could understand how they really work.
If you never heard of such a thing as 2D-TMDC before, join the club. They were only identified on an experimental basis a few years ago, in 2010 (graphene was discovered in 2004, for those of you keeping score at home).
Since 2010, researchers have been trying to match the performance in reality of 2D-TMDC materials with their performance in theory, without any luck.
The new breakthrough, from the Molecular Foundry at the Energy Department’s Lawrence Berkeley National Laboratory, unlocks one of the key mysteries of 2D-TMDC materials, at least as far as molybdenum disulfide goes.
More
Graphene Rival #2: Black Phosphorus
This next one comes to us from Pohang University of Science and Technology (POSTECH) in Korea, which this week reported that they figured out how to mod out black phosphorus into a “unique state of matter.”
Before we dig into that unique state of matter, the folks at POSTECH
have provided us with a really good explanation for why the race is on for 2D
alternatives to graphene.
Back in 2010, as they tell it, graphene was the only 2D game in town:
Graphene is extremely thin and has remarkable attributes. It is stronger
than steel yet many times lighter, more conductive than copper and more
flexible than rubber. All these properties combined make it a tremendous
conductor of heat and electricity. A defect-free layer is also impermeable to
all atoms and molecules. This amalgamation makes it a terrifically attractive
material to apply to scientific developments in a wide variety of fields, such
as electronics, aerospace and sports
More
The monthly Coppock Indicators finished July
DJIA: +88 Down. NASDAQ:
+189 Down. SP500: +116 Down.
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