Baltic Dry Index. 876 +01 Brent Crude 47.84
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
A billion here, a billion there, and pretty soon you're talking about real money.
Everett Dirksen
As we await for the
Great Vampire Squids of America to return to the markets later today, Bloomberg
estimates recent stock market losses as: China USD 5 trillion, USA USD 2.2
trillion, Hong Kong USD 1.4 trillion, Japan USD 0.5 trillion, UK USD 0.4
trillion, Rest of the World USD 3.0 trillion. Total USD 12.5 trillion. Toss in
combined commodity and crude oil losses of about roughly the same, and pretty
soon you’re talking about real money. And then there’s all that rising FX
volatility.
A USD 6.4 trillion hit in gambling mad China and Hong Kong, plus commodity losses has to hurt, no matter how it’s spun, and there’s no reason to think that the decline is anywhere near over. A multi decade malinvestment boom and bubble bust is in act one of the Great Correction, and while there will be volatile bounces from time to time as the HFT algo thieves try to steal each other’s dollar, as the Glencore mining debacle shows, very real losses are arriving in force as a result of all the earlier mal and misinvestment. Caveat Emptor. I suspect that this crash is far from over in China and the rest of the BRICs.
China's Stock-Rescue Tab Surges to $236 Billion, Goldman Says
September 8, 2015 — 4:51 AM BST
China’s government has spent 1.5 trillion yuan ($236 billion) trying to
shore up its stock market since a rout began three months ago, according to
Goldman Sachs Group Inc.
The “national team" expended about 600 billion yuan in August
alone, with the total now equivalent in value to 9.2 percent of China’s
freely-traded shares, strategists including Kinger Lau wrote in a report dated
Monday. Investor concern about what will happen when the government starts to
pare these holdings is overdone, they wrote, citing past experiences in Hong
Kong and in the U.S.
The Shanghai Composite Index has tumbled 41 percent since its June high
to erase $5 trillion in value from mainland bourses as leveraged investors fled
amid signs of deepening weakness in the economy. To stop the plunge, officials
armed a state agency with more than $400 billion to purchase stocks, banned
selling by major shareholders and told state-owned companies to buy equities.
The rout, coupled with a shock devaluation of the yuan, has roiled global
markets.
More
China to cut dividend taxes for long-term shareholders
China said on Monday it would remove personal income tax on dividends
for shareholders who hold stocks for more than a year, in a move aimed at
encouraging longer-term investment in equities as opposed to short-term
speculation.
The government also said it would halve the tax on dividends for those
holding shares between a month and a year and that the changes would come into
effect on Tuesday.
Full tax payment will be required for shareholders who hold shares for
less than a month, the finance ministry said in a statement on its website.
The measures are the latest in a volley of policy moves Beijing hopes
will halt a slide in Chinese equities that has rattled global investors and
raised fresh doubts about the strength of the world's second-biggest economy.
Hours earlier, the Shanghai and Shenzhen Stock Exchanges and the China
Financial Futures Exchange proposed introducing a "circuit breaker"
on one of the country's benchmark stock indexes to stabilize the market, the
Shanghai exchange said in a statement on its website.
More
China's Foreign Exchange Reserves Fall in August on Yuan Support
September 7,
2015 — 8:54 AM BST Updated on September 7, 2015 — 11:12 AM BST
China’s foreign-exchange reserves fell by a record last month as the
central bank sold dollars to support the yuan after the biggest devaluation in
two decades spurred bets on continued weakness.
The currency hoard declined by $93.9 billion to $3.56 trillion at the
end of August, from $3.65 trillion a month earlier. Economists surveyed by
Bloomberg had forecast a median $3.58 trillion. The yuan weakened in offshore
trading and 10-year Treasury futures contracts fell after the data.
The reserves’ decline illustrates the cost to China as it props up its
currency and seeks to stem an outflow of capital that threatens to deepen the
nation’s economic slowdown. The shrinkage in reserves means less money flowing
into the financial system, creating what Deutsche Bank AG strategists have
termed “quantitative tightening.”
“If the central bank continues its intervention, China’s
foreign-exchange reserves will continue to shrink -- the heavier the
intervention, the deeper the fall,” said Li Miaoxian, a Beijing-based analyst
at Bocom International Holdings. While the People’s Bank of China is trying to
talk up the yuan exchange rate, it’s “inevitable” the nation will see
continuous capital outflows and yuan depreciation pressure in the coming
months.
----Chinese officials telegraphed confidence in the economy’s underlying
solidity, predicting a stabilization in stocks and the currency at
a gathering of Group of 20 finance chiefs Friday and Saturday. The G-20,
meeting in Ankara, pledged to avoid tit-for-tat currency devaluations; the U.S.
Treasury chief separately said that China should avoid persistent exchange-rate
misalignments.
The biggest drop in China’s currency in 21 years last month spurred
concern that a weaker yuan will hurt countries exporting to China.
More
How BRIC investing went bust
Published: Sept 4, 2015 10:42 a.m. ET
Few investment concepts caught fire as quickly and convincingly as the
"BRICs" — a catchy shorthand for the fast-growth economies of Brazil,
Russia, India and China.
Coined by ex-Goldman Sachs economist Jim O'Neill in 2003, the BRICs
epitomized the shift in global economic power away from the developed economies
of the U.S., Europe and Japan toward these new stars of global economic
universe.
Looking at the big picture, the rise of the BRICs was not just
inevitable. It was already a done deal.
Taken together, the BRICs encompass more than 25% of the world's land
mass and 40% of the world's population. And the combined Gross Domestic Product
(GDP) of the BRICs comfortably exceed that of the United States. Adjust for
Purchasing Power Parity (PPP), and the BRICs already account for 52% of the
planet's GDP.
After the financial meltdown of 2008, investors flocked to the BRICs
favoring them over stagnant, developed economies like Old Europe, aging Japan
and the politically fractious and indebted United States. Not unreasonably,
investors expected the value of their portfolios to rise with the prospects of
these newly anointed kings.
BRIC investing breaks bad
Alas, things turned out very differently.
Today, U.S. markets trade within striking distance of their all-time
highs. In contrast, the MSCI BRIC Index languishes 48% below its 2007 peak —
the year the iPhone was launched and George Bush was still president. This year
has been particularly unkind to BRIC investors.
Below is a quick look at how the BRICs have fared in the recent market
turmoil.
More
European shares up, Glencore jumps on plan to cut debt
LONDON, Sept 7 (Reuters) - European shares bounced back on Monday from
sharp declines in the previous session, boosted by mining and commodities
trading firm Glencore which rose after announcing plans to cut its debt.
The pan-European FTSEurofirst 300 index was up 0.8 percent at 1,404.12
points by 0758 GMT, after closing 2.5 percent lower on Friday when a mixed jobs
report fuelled uncertainty about the timing of a likely U.S. rate hike.
Glencore shares surged 8 percent, the top gainer in Europe, after the
company said it will suspend dividends, sell assets and raise $2.5 billion in a
new share issue to cut its debt by a third to $20 billion by the end of next
year.
"Concerns regarding the group's balance sheet have weighed heavily
on the share price in recent weeks. Whilst uncertainties regarding prospects
for China and its impact on the mining sector remain, Glencore management
appear to be taking firm action to try and remove the company from the eye of
the storm," Keith Bowman, equity analyst at Hargreaves Lansdown, said.
The company has been under pressure to cut debt as prices for its key products,
copper and coal, have sunk to more than six-year lows on concerns about China's
economic growth. Even with Monday's bounce, its shares are still down more than
50 percent this year after hitting record lows last week.
More
We end for today with trouble at mill.
The mill in this case being EUSSR wind farm windmills aka wind turbines. Operators want
more subsidies. Consumers want cheap electricity. In Scotland, the horse and
buggy whip makers want a subsidy too. The slowing global economy is starting to
squeeze government subsidies. Subsidies are rarely the answer to anything. They
largely divert cash into malinvestment and into bringing in early inefficient
new products too soon.
Wind Farm Investment Plunges With Power Prices in Nordic Region
September 4, 2015 — 5:00 AM BST
Investors are pulling back from wind farms in Nordic nations as the lowest
electricity prices in 12 years cut the profitability of new projects.No wind farms were commissioned in Sweden in the second quarter, compared to 50 megawatts in the same period a year earlier, according to the nation’s wind association. Investment in utility-scale Nordic wind assets fell 76 percent to $1.2 billion in the three years through 2014, according to data from Bloomberg New Energy Finance.
“The low purchase price for power is worrying,” Thomas Wrangdahl, first vice-president and head of lending at the Nordic Investment Bank, said in a telephone interview. “We are seeing less investments in new power production in the market, particularly in the wind industry, and we believe that it’s linked to the low prices.”
The Nordic region has the lowest electricity prices in Europe and some of the highest reliance on renewables. The next-quarter contract, a benchmark, slumped 33 percent in the past year, according to data from Nasdaq Commodities exchange in Oslo. Prices dropped to the lowest for at least 12 years in June as wet weather boosted hydropower reserves.
The Nordics were early adopters of renewable technologies, creating the biggest wind turbine maker, Denmark’s Vestas Wind Systems A/S. Lower power prices are undermining those efforts, with Denmark considering a U-turn on its ambitious green energy targets and Finland preparing to cut incentives for wind. Norway’s government-owned Statkraft AS canceled investments in some of Scandinavia’s biggest wind projects in June, citing reduced profitability.
This year could be a “pause in investment,” according to Niclas Andersson Boberg, a director of M&A at EY in Stockholm. “The number of projects that are good enough to be finalized are fewer.”
The cost of wind power needs to rise to 60 euros ($66.70) a megawatt-hour from about 50 euros a megawatt-hour now to get more projects built, he said.
The drop in investor appetite may become a barrier to reaching goals for reducing greenhouse gases. Part of the problem is uncertainty around how governments will regulate and support the industry beyond 2020, according to Charlotte Unger, chief executive officer of Sweden’s wind-industry trade group Svensk Vindenergi.
More
Feed-in tariff proposals ‘unnecessary, unjustifiable, unmanageable and ultimately destructive’
By Peter Bennett 03 September 2015, 11:19
Updated: 04 September 2015, 15:03
The chairman of the Solar Trade Association Scotland has voiced fierce
criticism over the government's recent proposals to cut the feed-in tariff for
solar PV by almost 90% but has expressed his hope that Scotland's political
support for solar could save the country's PV sector.
Reacting to the government's FiT plans, John Forster, chairman of STA
Scotland called the new proposals "unnecessary, unjustifiable,
unmanageable and ultimately destructive". However, Forster is hopeful that
solar in Scotland can thrive.
Forster explained: "Earlier this year in March, we launched STA
Scotland, due to the growing interest from industry and the Scottish
Government. There are approximately 500 solar related jobs in Scotland, and
with solar set to play a significant part in meeting the Scottish Government’s
2020, 100% renewable electricity target we had predicted that the Scottish
solar industry would add a further 3,000 jobs over the next five years. Energy
Minister Fergus Ewing has already highlighted that Scotland is at the forefront
of the renewables industry and that solar needs to play a key role in meeting
this target.
"This slashing of support in January 2016, set out in the FiT review, is completely unnecessary," continued Forster. "The potential damage to our industry is completely unjustifiable. As we saw in the recent consultations announced by the UK government, for the removal of pre-accreditation and early closure of the Renewable Obligation (RO) scheme, the FiT review wrongly attributes projected overspend within the Levy Control Framework (LCF) to the solar industry."
"This slashing of support in January 2016, set out in the FiT review, is completely unnecessary," continued Forster. "The potential damage to our industry is completely unjustifiable. As we saw in the recent consultations announced by the UK government, for the removal of pre-accreditation and early closure of the Renewable Obligation (RO) scheme, the FiT review wrongly attributes projected overspend within the Levy Control Framework (LCF) to the solar industry."
More
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. Omnipotent Government
At the Comex silver depositories Friday
final figures were: Registered 51.81 Moz, Eligible 116.08 Moz, Total 167.89
Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No crooks today, just more trouble ahead it seems.
Peak Bond Demand——Now Comes The $8 Trillion EM Forex Unwind
by Reuters • September 6, 2015
China’s summer shock may mark the end of an era of globalization that
helped define world markets for more than a decade.
Investor anxiety about the consequences is well-founded.
Beijing’s integration into the global economy since 2002 reshaped the
financial as well as economic landscape – mainly by the way China itself and
the economies it supercharged with outsize demand for raw materials banked the
hard cash windfalls they earned over the following 12 years.
According to the International Monetary Fund, the dollar value of
foreign currency reserves held by all developing nations ballooned by almost $7
trillion in just one decade to a peak of some $8.05 trillion by the middle of
last year.
While China was the main driver, accounting for about half of that
increase, its economic boom created a commodity supercycle that flooded the
coffers of resource-rich nations from across Asia to Russia, Brazil and the
Gulf.
As the vast bulk of this hard cash was banked in U.S. Treasury and other
low risk, rich-country bonds, they were at least one critical factor in the
halving of U.S. Treasury and other Group of Seven government borrowing costs
over the same period.
----
Alongside the disinflationary impact of
China’s low cost labor on western goods imports and wages, this reserve stash
helped extend what has now been a 20-year bull market in bonds.
What’s more, the drop in yields, by skewing relative returns between
stocks and bonds and also the relative cost of capital for companies, also at
least partly underwrote a post-credit crisis surge in equity prices to
successive records.
Reverse that bond buying, even at the margin, and world asset markets
may have a major problem.
That’s especially so at a time when the big other marginal bid for
bonds, the U.S. Federal Reserve’s quantitative easing program, has ended and
when western recoveries are pressuring the Fed and others to normalize near
zero interest rates.
As China’s economy slows to its weakest in 25 years this year and
capital flows out of the country, pressure on the recently devalued and
loosened yuan peg means the People’s Bank of China has sold hundreds of
billions of dollars to shore up its currency over the summer.
Dutch bank Rabobank estimated China’s central bank sold $200 billion of
reserves in the last weeks of August alone.
More
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?
REC Joins O Capital in Egypt to Tap Solar Panel Market in Middle East, Africa
REC Solar ASA has signed a deal with O Capital, the renewable energy arm of Orascom Telecom Media and Technology Holding SAE, forming a partnership to sell solar panels and related services in the Middle East and Africa.O Capital will manage tenders and turnkey installations while REC will be responsible for the engineering side, it said in a statement. The companies are seeking to provide REC’s solar panels to residential, commercial and utility-scale projects.
REC sees Middle East and Africa as growth areas for the solar industry, according to Luc Graré, senior vice president for the region.
“Beginning in 2017, we are expecting 10 GW to be installed every year in the Middle East and Africa, which would make the region second in the world for new solar capacity after China,” he said by phone.
Egypt is expected to be a major contributor to this growth, since the country is targeting to get 20 percent of its electricity from renewables by 2020. To reach this goal, it would need to install 2 GW to 3 GW of clean energy a year, Graré said. Cairo-based O Capital was chosen as a local partner to facilitate access to the Egyptian market and surrounding area.
REC plans to establish similar partnerships in Ghana, South Africa and Kenya.
http://www.renewableenergyworld.com/articles/2015/09/rec-solar-joins-o-capital-in-egypt-to-tap-middle-east-africa.html
The monthly Coppock Indicators finished August
DJIA: +65 Down. NASDAQ:
+168 Down. SP500: +92 Down.
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