Wednesday 30 September 2015

A Predicament.

Baltic Dry Index. 926 -17        Brent Crude 47.96

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

Any sudden event which creates a great demand for actual cash may cause, and will tend to cause, a panic in a country where cash is much economised, and where debts payable on demand are large. In such a country an immense credit rests on a small cash reserve, and an unexpected and large diminution of that reserve may easily break up and shatter very much, if not the whole, of that credit.

Walter Bagehot. Lombard Street. 1873

Today we open with Glencore facing a big, likely expensive decision day tomorrow, at its giant if environmentally dirty, zinc mine in the Northern Territory, Australia.  Is Glencore the poster boy for the great commodity malinvestment bubble that was ultimately a consequence of the great gambling bubble spawned by the Great Nixonian Error of fiat money? Gambling replaced investment, under fiat money, as bad money drove out good, and financialised paper games grew to become the only game in town. Replace “country” with “Company” in Walter Bagehot’s quote above, and we get a pretty good idea of Glencore’s predicament.

When Greenspan’s Bubbleworld blew up spectacularly in 2007-2009, it increasingly looks like all the Central Bankster’s horses and men, QE forever and ZIRP, can’t put our Humpty Dumpty Greenspan bubble world back together again. Did Glencore just run out of road and talent? How many more will fall? 

Glencore Faces Yet Another Debt Challenge With Credit Due by May

September 30, 2015 — 12:49 AM BST
Add another looming problem to the list for Glencore Plc, the commodity group that’s lost almost $45 billion in market value this year.

A quarter of the beleaguered firm’s bonds and credit lines are due for refinancing by next May, compared with 9 percent for its peers, according to data compiled by Bloomberg. Glencore may have options for delaying the deadline for part of that $13.8 billion in lifeblood financing, but given that some of its debt is already trading like junk as the stock plummets, any bond refinancings will probably be pricey.

Shares of Glencore dropped 73 percent this year as a rout in commodities fueled by a slowdown in China’s economic growth threatened to shrink the company’s revenue as it attempts to manage its debt load. The company earlier in September announced a $10 billion debt-reduction program and cut its $30 billion of borrowings to protect its credit rating amid the commodity selloff.

Glencore's Biggest Risk Is Hiding in Plain Sight: David Fickling

September 30, 2015 — 3:21 AM BST
What you don’t know can hurt you, so it’s understandable that analysts have raised questions about Glencore’s opaque commodity-trading business. Without the ability to work out how it makes money, the unit is a “black box,” according to Morningstar’s David Wang.

But there’s more to fear from what’s in plain sight. Capital spending has been the biggest single drain on Glencore’s cash flow in every year since it started the takeover of Xstrata in 2012:

Even after announcing a $10 billion debt-reduction plan earlier this month, the company still expects to spend $10 billion to $10.5 billion by 2017 on capital works at its mines, farms, oil wells and processing facilities.

These aren’t the best tier-1 assets favored by BHP Billiton and Rio Tinto, Bernstein analysts led by Paul Gait wrote in a note to clients Tuesday, even if they’re still profitable right now.

That means that they’re more vulnerable to any further downturn in commodity prices, and in the meantime are throwing off less cash to help Chief Executive Officer Ivan Glasenberg reduce debt.

Glencore and, in particular, Xstrata rode the commodities boom by buying unloved assets just as a turn in the market during the 2000s was about to send them surging in value.

These takeovers didn’t always come cheap. While Glencore spent a median 1.4 times book value on the 20 deals for which valuation data are available, the 10 comparable pre-takeover transactions made by Xstrata came at 4.2 times book, according to data compiled by Bloomberg. That’s more than double the 2 times multiple in more than 3,500 deals across the mining, energy and agriculture sectors, separate data show.

The wave of deals also turned the new Glencore into a quite different business from the highly liquid, asset-light operation founded in 1974 by Marc Rich. Rich borrowed money from his father and father-in-law and got a partner to sell his vintage car to cobble together his 2 million Swiss francs of seed capital, according to the 2010 biography “The King of Oil.”

Using letters of credit secured against cargoes of oil and materials, the business could always settle its debts in a hurry. Moreover, by depending on volatility in commodity prices rather than the quality of any underlying assets, it could prosper in bear as well as bull markets.

Selling a tanker full of oil is easy; getting rid of a colliery is harder. Rio Tinto tried to sell some of its Australian and New Zealand aluminum operations back in 2011. Almost four years later, they’re still for sale, the Financial Times reported in May.

People think Glencore’s problem is its mysterious trading business. The more boring but pressing issue is its mediocre mining business. The company took on too much debt to buy assets which the market is now revaluing downwards.

Australian officials threaten to close giant Glencore zinc mine

Thu Aug 27, 2015 5:22am EDT
Glencore Plc's McArthur River zinc mine in Australia could be ordered to close unless it improves its environmental record and increases a financial bond covering rehabilitation of the site, according to government officials.

Residents near the zinc mine, one of the world's biggest, have complained of smoke coming from a waste rock dump, traces of lead in fish, and a contamination incident last year which resulted in cattle in the area having to be destroyed.

Adam Giles, the chief minister of the Northern Territory where the mine is located, said his government had been talking to Glencore for months about the need to come up with a plan to control increased levels of reactive waste rock, a chemical which turns into sulphuric acid when it meets water.

"We have been working with the mine itself to increase its level and standards of environmental protection at the site," Giles told Australian Broadcasting Corp.

"We have been adamant that unless Glencore fixes its environmental procedures and practices we will close the mine."

Miners in the Northern Territory are required to lodge a bond to cover 100 percent of the final remediation cost at every stage of the mine's life.

Glencore’s chief operating officer for zinc in Australia, Greg Ashe, said the mine was engaged in a process with the government around the bond and was committed to finding a balanced solution that meets the expectations of the government, the mine and the community.

"McArthur River and Glencore have been very frank with the government and the community about the environmental and operating challenges we've been facing," Ashe told a mining conference in the Northern Territory city of Darwin.

"The McArthur River Mine will continue to operate so long as we are able to extract and process the ore safely, so long as we're able to maintain our social license to operate and so long as we're economic."

A spokesman for Northern Territory Minister for Mines and Energy David Tollner said Glencore had been issued with an Oct. 1 deadline to lodge an amended bond.

In China, don’t expect a quick fix says LVMH. Not exactly what Glencore wanted to hear.

LVMH's Biver Sees More Difficult 2016 for Swiss Watch Industry

September 29, 2015 — 11:35 AM BST
LVMH watch chief Jean-Claude Biver said 2016 is set to be a tougher year for the Swiss watch industry because of the economic slowdown in China.
While revenue at LVMH brands such as Hublot should continue growing at a double-digit rate in 2015, “the problem might be next year,” Biver said in an interview Tuesday with Bloomberg Television. “Not only for us, but also for the whole industry.”
The introduction of Apple Inc.’s smartwatch, combined with a surge in the Swiss franc and China’s slowing economy, have clouded the outlook for Swiss timepieces. Exports fell in August, heading for the first annual decline in six years, and Swiss watchmaker executives are the most pessimistic in four years, according to a study published this month by Deloitte LLP.
“Hong Kong is suffering,” said Biver, who announced in August that TAG Heuer was closing a store in the island city as high rental costs and declining numbers of customers weighed on margins. “There is also a problem in China.”
Swiss watchmakers have struggled with a shrinking Chinese market since the country’s government started discouraging exuberant spending among officials in late 2012.

In VW news, bad news just keeps piling up like unsold diesels.

VW May Be Dropped by Swedish National Pension Funds Amid Scandal

September 29, 2015 — 6:27 PM BST Updated on September 29, 2015 — 11:00 PM BST
Sweden’s national pension funds may drop Volkswagen AG as an investment option amid concerns that future returns will suffer after Europe’s biggest carmaker cheated on emissions tests in some of its diesel cars.

The Third Swedish National Pension Fund, AP3, which managed 304 billion kronor ($36.3 billion) at the end of June, and the Ethical Council it has with the AP1, AP2 and AP4 funds will now evaluate the emissions scandal, Peter Lundkvist, head of corporate governance at AP3, said by phone on Tuesday. While VW "was prior to this definitely a company that belonged in our portfolios," that may no longer be the case, he said.

"What we do when faced with a situation like this is to evaluate based on our exclusion method, which looks at whether a company has breached any conventions that the Swedish state has signed," Lundkvist said. 
"That doesn’t seem to be the case with Volkswagen but we’ll now discuss Volkswagen in our Ethical Council and we’ll talk to the company. It’s unlikely that we would exclude the company because of the emissions scandal, but we may decide not to hold Volkswagen shares because of our view on future returns."

Diesel Scandal Undercuts One of VW's Few Strengths in Showroom

September 30, 2015 — 5:01 AM BST
Volkswagen’s admission this month that it was lying to customers about the benefits of diesel engines hit where it hurts: the showroom.

The German brand had been counting on fuel-efficient and fun-to-drive diesel-powered cars to turn around its slump amid a U.S. truck and SUV boom. Now, with its smaller diesels pulled from dealer lots while engineers work on a fix, analysts are split on whether VW will be the only major automaker to report a sales decline for September.

No one is more eager for a VW refit than Alan Brown, who runs the nation’s largest Volkswagen store. Even with 22 percent of his 237-vehicle inventory now quarantined, he said customers at Hendrick VW haven’t stopped asking about the cars. Last weekend, his team sold six new vehicles and handled questions from customers who like the diesels, wanted to know when they’d be available and wondered what kind of discounts they’d soon carry.

----America’s love of trucks and SUVs, fueled by available credit, affordable fuel and the latest technology, is helping push auto sales to the highest level in more than a decade. Industry researcher LMC Automotive is raising its 2015 total light-vehicle sales forecast to 17.2 million units from 17.1 million units.

When automakers report September sales on Thursday, the industry may show a 13 percent jump in car and light-truck deliveries, for an annualized rate, adjusted for seasonal trends, of 17.7 million, the average of 12 analyst estimates in a Bloomberg survey. The projected gains include 19 percent at Ford Motor Co., 14 percent at Fiat Chrysler Automobiles NV and 9.3 percent at General Motors Co. At Toyota Motor Corp., sales may rise 16 percent, seven analysts estimate. (For a detailed breakdown of estimates, click here.)

Volkswagen, including Audi, is likely to be the odd one out: Four analysts are evenly split between those who predict a decline or a gain. Their average estimate, for a 0.8 percent increase, is the lowest of any major automaker. If sales do rise, analysts said it may be that VW, like other automakers, benefited from Labor Day weekend, a traditional car-shopping holiday which last year fell in August. It would also likely be because of Audi: The average of three estimates for just the VW brand is for a 6.7 percent decline.
We end for the day with US frackers finally running out of road. Most were unprofitable with West Texas Intermediate at $100. At $45, most face restructuring at best, bankruptcy at worst.  Last decade was so last decade. It’s not the Greenspan-Bernocchio Bubbleworld anymore. The Fed’s talking chair seems to have run out of ideas.

Chesapeake Energy to cut 15% of workforce

Published: Sept 29, 2015 4:38 p.m. ET
Chesapeake Energy Corp. CHK, +1.19% said late Tuesday it reduced its workforce by 15%, or roughly about 800 workers, as part of a cost-cutting plan on weak oil and natural gas prices. The move will result in a one-time charge of $55.5 million in the third quarter, the company said. Shares of Chesapeake were down 0.2% in after-hours trade after closing 1.2% higher to $6.79 during the regular session. The stock is down 65% year to date.

“But it [the boom] could not last forever even if inflation and credit expansion were to go on endlessly. It would then encounter the barriers which prevent the boundless expansion of circulation credit. It would lead to the crack-up boom and the breakdown of the whole monetary system.”

Ludwig von Mises.

At the Comex silver depositories Tuesday final figures were: Registered 45.26 Moz, Eligible 120.98 Moz, Total 166.24 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
No crooks today, just more on the giant global commodities malinvestment bubble now burst and its aftermath now sweeping over emerging markets.

IMF: Commodities slump could hold growth rates lower for longer

Date September 29, 2015 - 4:57AM
Australians might have to get used to slower growth rates as commodity price weakness persists and investment outside mining struggles to pick up the slack, says the International Monetary Fund.

The IMF, in its latest World Economic Outlook series, says the sharp decline in many metal and energy prices over the past few years will shave about 1 percentage point off gross domestic product growth rates between 2015 and 2017 in commodity-reliant emerging markets.

According to its formula, growth rates in Australia could slip to 1.8 per cent over the next three years, from 2.8 per cent between 2012 and last year.

However, reforms designed to smooth out the peaks and troughs of previous commodity booms means developed economies such as Australia should not suffer as much, the IMF says.

"Whether the decline in growth has opened up significant economic slack – that is, has increased the quantity of labour and capital that could be employed productively but is instead idle – and the degree to which it has done so are likely to vary considerably across commodity exporters," the IMF says.

"The variation depends on the cyclical position of the economy at the start of the commodity boom, the extent to which macroeconomic policies have smoothed or amplified the commodity price cycle, the extent to which structural reforms have bolstered potential growth, and other shocks to economic activity."

At the end of June, Australia's economic growth was running at 2 per cent, down from 2.5 per cent at the end of the first quarter.

Some indicators point to a further slowing in the growth rate, with the most bearish investment bank economists warning that Australia could struggle to reach 2 per cent growth this year. Goldman Sachs rates the chances of a recession at one in three.

----Although the commodities-related downswing is more marked in emerging markets whose economies aren't as open and flexible as Australia's, developed world commodities exporters are also vulnerable to slower growth when export prices come down, the IMF says.

Norway, one of the world's biggest oil exporters, last week cut its key overnight deposit rate to a record low 0.75 per cent in an effort to arrest declining growth rates and rising unemployment. Canada, another developed economy, has slipped into recession because of soft oil and gas prices.

"Commodity-exporting economies are at a difficult juncture," the IMF says.

"Global commodity prices have declined sharply over the past three years, and output growth has slowed considerably among commodity-exporting emerging market and developing economies."

The IMF's warning echos those of a long list of Australian experts.

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, 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?

These Incredible Saltwater Batteries Are Designed To Store Renewable Energy

Now we can clean power even when the sun isn't shining or the wind isn't blowing.

If we're going to use renewable power in a big way, we're going to need better battery storage. Because solar and wind are intermittent sources of energy, they need to be backed up for when they're not there, because, say, it's night time.

Also, we're currently wasting a lot of renewable power because we don't use it at the moment it's produced. Wind turbines are a bit like car factories that only sell half their vehicles; when there's more power generated by turbines than the grid can handle, that power is "curtailed" and lost, rather than saved for another time.

There are few things that separate Aquion's saltwater batteries—which are designed for renewable energy storage—from other new batteries. For one, they're entirely non-flammable, unlike some lithium-ion batteries that have sometimes caught fire. And second, they're easily disposed of (Jay Whitacre, who invented them, calls them the "first Cradle-to-Cradle batteries"). But perhaps the most important thing is that they're available at all. There are dozens of interesting storage technologies in development these days. But the field is notorious for producing good ideas that, for one reason or another, aren't quite ready for prime time.

"A lot of things that are put forward as the next thing in batteries actually have very unexplored scalability," says Whitacre, a professor at Carnegie Mellon University’s College of Engineering. "Our team's decision very early on was not to work on things that didn't have an obvious path to manufacturing. We started from almost 'how do I manufacture this?' rather than 'what material should I use?'"

The batteries are made from non-toxic materials like salt water, carbon and manganese oxide, and packaged into stackable modules. They don't have the energy density of lithium-ion batteries (say, the ones used in electric cars) but they also don't degrade as quickly and don't need the same "thermal management" (i.e. equipment to make sure they don't heat up or cool down too much). And, as already mentioned, they're non-toxic, unlike lead batteries.

Aquion produces them from a former car factory outside Pittsburgh and already has several dozen customers. For example, a resort in Hawaii, Bakken Hale, has a 1MW battery stack, allowing it to completely rely on its solar panels for power.

Whitacre opened Aquion Energy in 2008, receiving venture finance from Kleiner Perkins Caufield & Byers a little time later. The company started manufacturing last year. Whitacre himself recently picked up the $500,000 Lemelson-MIT Prize, which recognized his ability "to connect laboratory discovery, policy impact and entrepreneurial savvy."

Whitacre plans to use the money partly to pursue new fundamental battery research, though only the most practical kind. "I want to do work that is more useful near-term," he says.

The monthly Coppock Indicators finished August

DJIA: +65 Down. NASDAQ: +168 Down. SP500: +92 Down. 

Tuesday 29 September 2015

The Rout.

Baltic Dry Index. 943 Unch.       Brent Crude 47.34

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.

True, governments can reduce the rate of interest in the short run, issue additional paper currency, open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression. 

Ludwig von Mises.

Yesterday brought more of the Great Reconnect.  The central banksters malinvestment bubble 2009-2014 has finally run out of steam as China buckles from an excess of just about everything, The Commodity Supercycle long ago peaked in a one off Chinese version of the Great Nixonian Error of fiat money malinvestment. 

Under the FED’s lead on ZIRP and QE Forever, companies have piled into debt, to buy back stock, to take over each other, to drill unprofitable oil and gas wells, to build mines for a Chinese experiment that’s gone off the rails, to pursue folly on the grandest scale. Suddenly from Alcoa, to Glencore, to Volkswagen it’s all going massively wrong. The Great Malinvestment Bubble is finally bursting.  We are entering the final phase of the Great Nixonian Error of fiat money.

Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.

John Kenneth Galbraith

With Glencore, Commodity Rout Beginning to Look Like a Crisis

September 28, 2015 — 8:28 PM BST Updated on September 29, 2015 — 4:08 AM BST
The 15-month commodities free-fall is starting to resemble a full-blown crisis.

Investors are reacting to diminished demand from China and an end to the cheap-money era provided by the Federal Reserve. A Bloomberg index of commodity futures has fallen 50 percent since a 2011 high, and eight of the 10 worst performers in the Standard & Poor’s 500 Index this year are commodities-related businesses.

Now it all seems to be coming apart at once. Alcoa Inc., the biggest U.S. aluminum producer, said it would break itself into two companies amid a glut stemming from booming production. Royal Dutch Shell Plc announced it would abandon its drilling campaign in U.S. Arctic waters after spending $7 billion. And the carnage culminated Monday with Glencore Plc, the commodities powerhouse that came to symbolize the era with its initial public offering in 2011 and bold acquisition of a rival in 2013, falling by as much as 31 percent in London trading.

“With China slowing down and a lot of uncertainty, fears in the market have intensified, and the reduction in the pace of demand growth for all commodities has seemed to send everybody off the cliff,” said Ed Hirs, managing director of a small oil producer who teaches energy economics at the University of Houston.

----It’s about to get worse, according to analysts John LaForge and Warren Pies of Venice, Florida-based Ned Davis Research Group. Commodities may be in the fourth year of a 20-year “bear super-cycle,” according to an Aug. 14 research note. The analysts looked at commodity busts dating to the 18th century and found them driven by factors such as market momentum rather than fundamentals, LaForge said Monday in an interview.

The good news: most of the damage is done in the first six years, LaForge said.

“In commodities you’re going to get a lot of failures, companies closing up,” he said. “This needs to happen to bring down supply.”

Nasdaq Composite completes the ‘death cross’ grand slam

Published: Sept 28, 2015 12:19 p.m. ET

Nasdaq, Dow, S&P 500 and Russell 2000 all under ‘death cross’ spell for 13th time since 1979

The Nasdaq Composite has produced a “death cross” chart pattern on Monday, joining the other three major market indexes, which have produced similar bearish chart patterns over the past couple months.

History suggests this occurrence could weigh on the broader stock market over the shorter term, but it’s not quite the death knell for the market over the longer term that the pattern’s name might suggest, according to data provided by Sundial Capital.

A death cross appears when the 50-day moving average crosses below the 200-day moving average, an event that many chart watchers view as marking the spot a shorter-term correction morphs into a longer-term downtrend.

----The Nasdaq’s death cross completes the cycle, as the pattern has appeared in the charts of the Dow Jones Industrial Average DJIA, -1.92%  on Aug. 11, for the S&P 500 index SPX, -2.57%  on Aug. 28 and for the Russell 2000 Index RUT, -2.87%  on Sept. 2. Read more about the spread of the death cross.
Since their death crosses appeared, the Dow has slumped 7.5%, the S&P 500 has shed 4.6% and the Russell 2000 has lost 3.8%.

Monday marks the first time since Aug. 24, 2011, that all four indexes fell under the death cross spell at the same time, and just the 13th time since 1979, according to Sundial.

Wall Street drops as anxious investors eye China

Mon Sep 28, 2015 6:46pm EDT
U.S. stocks finished sharply lower on Monday and were on track for their worst quarter in four years as investors worried about the health of China's economy and its potential impact on the timing of a U.S. interest rate increase.

The Nasdaq composite .IXIC lost 3 percent and S&P 500 .SPX dropped more than 2 percent.

Much of the damage came from pharmaceutical and biotech stocks after Democratic lawmakers on Monday attacked "massive" price increases of two heart drugs from Canada's Valeant Pharmaceuticals International Inc(VRX.TO), which tumbled 16.5 percent.

The Nasdaq biotechnology index .NBI fell 6 percent, its worst one-day drop since 2011, adding to losses from last week when Democratic presidential candidate Hillary Clinton criticized drug pricing.

Among the S&P sectors, the health care index .SPXHC was the deepest decliner, down 3.84 percent.

"The broad healthcare sector and China are hurting the market. It's time for risk-off and there's no place to hide," said Richard Weeks, managing director at HighTower Advisors in Vienna, Virginia.

Profits at Chinese industrial companies fell 8.8 percent, fresh data showed, pushing down shares of raw material producers and energy companies. Oil prices fell more than 2 percent.

U.S. consumer spending rose more than expected in August, according to another report, appearing to add to the case for an interest rate increase this year.

Asia shares skid to three-and-a-half-year lows on China anxiety

Mon Sep 28, 2015 11:36pm EDT
Asian shares skidded to 3-1/2-year lows and the dollar sagged on Tuesday, pulled down by a sharp losses on Wall Street after weak Chinese data rekindled worries about its fragile economy.

Commodities struggled after fears of weaker demand pushed them to multi-year lows overnight. Adding to the gloom, commodity trader Glencore's (0805.HK) Hong Kong-listed shares were around 28-percent lower on Tuesday, after its London-listed stock plunged on debt worries a day earlier..

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slumped 2.2 percent, touching its lowest levels since June 2012 and extending early declines after Chinese shares opened lower.

China's blue-chip CSI300 index .CSI300 and the Shanghai Composite Index .SSEC were both down 1.8 percent.

Japan's Nikkei stock index .N225 tumbled 2.8 percent to 8-month lows.

"There is a lot of red in Asian equity markets at the moment," said Martin King, co-managing director at Tyton Capital Advisors.

"Disappointing industrial profits in China continue to bolster concerns about growth and many investors are taking profits from the Nikkei and sitting in cash and alternatives, or repatriating capital to western markets in a perceived flight to quality."

Chinese industrial companies' profits fell at their fastest rate in four years, official data showed on Monday, sparking fresh fears about the strength of that country's economy ahead the final reading of China's Caixin Purchasing Managers' Index on Thursday.

There can be few fields of human endeavour in which history counts for so little as in the world of finance. Past experience, to the extent that it is part of memory at all, is dismissed as the primitive refuge of those who do not have the insight to appreciate the incredible wonders of the present.

J. K. Galbraith.

At the Comex silver depositories Monday final figures were: Registered 46.22 Moz, Eligible 120.09 Moz, Total 166.31 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

Volkswagen suffers as buyers abandon its debt

The European Central Bank has joined investors who do not want to invest in VW, driving up the car firm’s borrowing costs

Volkswagen is already paying the price of its emissions scandal even before any fines are levied, as investors flee its bonds, driving up the cost of borrowing for the manufacturing titan.

The European Central Bank is believed to have stopped buying VW bonds from the firm which are backed by car loans, which it had been buying as part of its quantitative easing package. Private investors are also dropping out of the market, in a sign that they fear for VW’s financial health.

It comes as reports emerged that VW’s supervisory board had been told by engineering staff and by suppliers as far back as 2011 about the so-called defeat devices which lied to regulators about the cars’ emissions. Bosses initially denied there was any problem when US regulators accused VW of deliberately giving false numbers to environmental officials.
----Earlier in the year, VW could borrow long-term funds for as little as 0.7pc. Now the yield on those bonds is up to the 2.3pc mark, indicating that investors believe the company is now a riskier bet. The price of credit default swaps – a type of insurance against VW getting into financial difficulty and failing to repay its debts – has also rocketed. Five-year CDS spreads have more than tripled to 227.4 basis points in the past week, indicating the scale of investors’ concern over the company.

German Prosecutors Open Investigation Into VW's Winterkorn

September 28, 2015 — 11:49 AM BST Updated on September 28, 2015 — 12:55 PM BST
Prosecutors in Germany have opened a criminal probe into former Volkswagen AG Chief Executive Officer Martin Winterkorn after the manufacturer admitted it cheated emissions tests in some of its diesel cars.
The investigation targets accusations of fraud tied to the sale of vehicles, and will try to determine who was responsible for seeking to circumvent emissions regulations, prosecutors in Braunschweig, Germany, said in an e-mailed statement on Monday. Volkswagen has also filed a criminal complaint in the case with the same authorities to assist with its own investigation.
The probe comes five days after Winterkorn stepped down as CEO amid a scandal that wiped 23 billion euros ($25.7 billion) from Volkswagen’s market value. Switzerland on Friday banned sales of affected VW models, while German regulators said Volkswagen needs to provide a solution for some 2.8 million cars in Germany by Oct. 7 or risk them being pulled off the road.
The German government is “working hard to contain the damage,” Peter Altmaier, chief of staff to Chancellor Angela Merkel, said in an interview with Bloomberg Television in Berlin. The government is keen to ensure that the reputation of German cars in general is “not damaged.”
Winterkorn was replaced on Friday by Matthias Mueller, the head of the Porsche car brand. A VW spokesman didn’t immediately respond to a phone call and email seeking comment about the criminal probe.
Volkswagen tumbled as much as 8.2 percent on Monday in Frankfurt, taking its drop since the diesel cheating became public on Sept. 18 to 39 percent.

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, 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?

An ancient Japanese art is transforming solar power

Anmar Frangoul | Special to
September 28, 2015
Solar power is becoming an increasingly significant part of our planet's energy mix.
According to the International Energy Agency, by 2050 the sun could become the world's biggest source of electricity.
At the University of Michigan a team of experts has come up with a solar cell concept -- using an ancient Japanese craft -- that they say can track the sun in a highly effective way.
Using kirigami – a type of Japanese paper art similar to origami – the team, which includes engineers and an artist, have developed what the university describes as, "an array of small solar cells that can tilt within a larger panel." It is this ability to tilt that enables the cells to follow the sun's rays.
"I have done research in the area of solar cells previously and was aware of the different problems there, including the need to do solar tracking more effectively," Max Shtein, associate professor of materials science and engineering at the university, told CNBC over email.
Shtein added that he had been thinking "for some time" about miniaturizing structures and mechanisms that are currently being used on a bigger scale. After talking with artist Matthew Shlian, who presented him with new paper forms he'd been working with, Shtein said he saw "a connection."
"The design in its current form relies on solar cells being distributed over a large sheet," he said.
Shtein went on to explain that these cells can be segmented and mounted or bonded to a flexible substrate – an underlying layer – or can be flexible themselves.
"The sheet itself has parallel cuts made in it, with some offset between the neighbouring rows of cuts," Shtein added.
"When stretched, the entire structure deforms to make individual elements of the surface tilt in a way that's very uniform throughout the sheet, and with a tilt angle that's proportional to how much you stretch it. That's where the control comes from."
In terms of efficiency, Shtein told CNBC that, "On the basis of any given surface area of semiconductor material used," his team's design could capture more than 35 percent electricity over the course of "a typical day, compared to a design where the photovoltaic is stationary."
One of the main questions surrounding the design is ensuring reliability, which could involve more testing or structural modification, or what Shtein described as "a deeper look at the materials and structures involved."
In a press release at the beginning of September, the University said it was in the process of seeking patent protection for the intellectual property as well as "seeking commercialization partners to help bring the technology to market."

The monthly Coppock Indicators finished August

DJIA: +65 Down. NASDAQ: +168 Down. SP500: +92 Down.