Baltic Dry Index. 805 -13 Brent Crude 46.36
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.
Ludwig
von Mises.
The fallout from a slowing China claimed another scalp yesterday, this
time in Australia. After losing the Ashes and One Day International Cricket
series to England, a slowing commodity economy gained Australia its sixth Prime
Minister in eight years. A banana republic without the bananas comes to mind. Or
Greece. Below, Abbott replaced by bull.
Turnbull Sworn in as Australian Prime Minister as Abbott Dumped
September 14, 2015 — 3:50 PM BST Updated on September 15, 2015 — 4:35 AM
BST
Malcolm Turnbull was sworn in as Australia’s sixth prime minister in
eight years Tuesday after ousting Tony Abbott, pledging to revitalize an
economy battered by the slowdown in China.
The 60-year-old former investment banker takes charge of a post-mining boom
economy suffering its weakest run of growth since the 1991 recession. He beat
Abbott, 57, in a late-night ballot of ruling Liberal Party lawmakers, concerned
the government was heading for defeat in elections next year after trailing in
opinion polls for more than 12 months.
While Turnbull, a former Goldman Sachs Group Inc. executive, enjoys
strong public support, he may struggle to reunite his party after the
leadership ballot in which nearly half the lawmakers picked Abbott to stay, and
with some senior ministers expected to step aside.
“It’s going to be hard,” political analyst Stephen Stockwell of
Brisbane’s Griffith University said by phone. Still, Turnbull will have “a
strong mandate to modernize the Australian economy.”
The S&P/ASX 200 Index declined 1.4 percent as of 1:28 p.m. local
time, extending losses after Chinese equities opened lower, while yields on
benchmark 10-year Australian government bonds fell 1 basis point to 2.68
percent. The Australian dollar fell to 71.32 U.S. cents after the Reserve Bank
said China’s slowdown and market volatility increased risks to global growth, snuffing out a rally that came after Turnbull’s selection.
More
In US news, dare the Fed raise its key interest rate? As the dollar
soars, can Brazil and the rest of the emerging markets survive it?
The U.S. Dollar Is Gaining Like It's the 1980s -- For Better or Worse
September 15, 2015 — 1:07 AM BST
The dollar is in the midst of its strongest rally since 1984 and --
unlike then -- there may be little anyone can do to stop it.
Thirty years ago this month, the U.S. was powerful enough to muscle its
way out of a damaging trade imbalance when it took financial markets by
surprise with the Plaza Accord. In that agreement, it persuaded Japan,
Germany, France and the U.K. to join in coordinated action to help weaken the
dollar.
Now, the Federal Reserve’s willingness to raise its interest-rate
benchmark, along with currency-weakening stimulus from other central
banks, has strengthened the dollar enough to risk crimping U.S. inflation and
casting a cloud over corporate earnings. The greenback is already within 8
percent of a record high, according to the Fed’s Trade-Weighted Broad Dollar Index,
and the danger is tighter monetary policy may supercharge its rally.
“The Fed is in a position to raise rates but it is extremely cautious,
and the impact of the one-way dollar strength on U.S. exporters and repatriated
income must be taken into account,” said Makoto Utsumi, 81, who was a
minister at the Japanese embassy in Washington D.C. at the time of the Plaza
Accord and is now chairman of the global advisory board for Tokai Tokyo
Financial Holdings Inc. “The common understanding for the need for policy cooperation
shared at the Plaza Accord is lost and it’s not clear where the true leadership
is in each country or in the world.”
The
dollar has surged 20 percent against the yen in the past two years and 17
percent versus the euro as the prospect of higher U.S. interest rates contrasts
with monetary easing in Japan and Europe. The Fed’s dollar index, which tracks
the greenback versus 26 currencies of U.S. trading partners, has climbed more
than 18 percent since the end of 2013, approaching the record set in February
2002. It is heading for its steepest two-year advance since 1984, when it
surged 32 percent.
More
Shiller: Investors haven’t been this worried about a stock-market bubble since 2000
Published: Sept 14, 2015 6:04 a.m. ET
Investor fears that the stock market is overvalued have hit their highest
level since the dot-com bubble’s peak in 2000, and that could lead to a bear
market, warns Nobel-winning economist Robert Shiller.“It looks to me a bit like a bubble again with essentially a tripling of stock prices since 2009 in just six years and at the same time people losing confidence in the valuation of the market,” the Yale University professor told the Financial Times in an story published Sunday. “When we see a correction and an increase in the VIX, the problem is the short-run thing of when will it turn?”
Shiller said those investor fears are showing up in his valuation confidence indexes, which are based on his surveys of investor sentiment. These indexes indicate that worries are at their greatest level since 2000. Shiller expressed concerns around a valuation confidence index in an interview with MarketWatch in the spring, when he noted confidence had been dropping for the past year.
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Fitch warns of emerging market shock if Fed sticks to rate plan
Investors do not believe the US Federal Reserve will dare to take away the punch bowl. They may be in for a nasty surprise if it does
merging markets have accumulated $7.5 trillion of external debt and are
acutely vulnerable to a rapid rise in US interest rates, regardless of whether
they borrowed in dollars or their own currencies, Fitch Ratings has warned.
The credit agency said international markets are pricing in a much
slower pace of US monetary tightening than the US Federal Reserve itself,
risking a potential financial upset in East Asia, Latin America and Africa if
Fed hawks refuse to bow to market pressure over the next two years.
Fitch said the Fed has signalled a rise in rates to 3.8pc beyond 2017
but investors simply refuse to believe that this will happen, with futures
contracts implying rates of just 1.4pc over the same span – an unprecedented
gap of 240 basis points, and one that is fraught with risk.
More
Elsewhere, gloom, gloom,
and yet more gloom, and not just from El Nino effects in Indonesia.
China Stocks Post Biggest Two-Day Loss in Three Weeks on Economy
September 15, 2015 — 2:36 AM BST Updated on September 15, 2015 — 6:14 AM
BST
China’s stocks fell for the steepest two-day loss in three weeks amid
concern investors will continue to pull funds from the nation’s equities as
data show a deepening economic slowdown.The Shanghai Composite Index dropped 2.6 percent to 3,032.68 at 1:06 p.m., led by material and industrial shares. The net value of mainland equity funds plunged 44 percent last month, while traders withdrew $15 million from the biggest U.S. exchange-traded fund tracking mainland stocks in the five days through Sept. 11, according to data compiled by Bloomberg. Yuan positions at the central bank and financial institutions fell by the most on record in August, a sign that policy makers stepped up intervention to support the currency.
“The economy has not shown signs of a pick-up after a series of cuts in interest rates and reserve requirements, while expectations about yuan depreciation are still there,” said Zhang Haidong, chief strategist at Jinkuang Investment Management in Shanghai. “Yuan-denominated assets face downward pressure. The market is still weak.”
The Shanghai Composite plunged 2.7 percent on Monday after weekend data showed industrial output missed economists’ forecasts and investment in the first eight months increased at the slowest pace since 2000. The benchmark gauge has tumbled 41 percent from its June high to erase $5 trillion in value on mainland bourses as leveraged investors fled amid concerns valuations weren’t justified given the weakening economy. Margin debt in Shanghai slumped to a nine-month low on Monday.
The Shanghai index may fall to 2,700 as stocks are still expensive, said
Francis Cheung, CLSA head of China and Hong Kong strategy, said in a briefing on Tuesday. The gauge is valued at 11.9 times 12-month projected earnings, compared with the five-year average multiple of 10.3, Bloomberg data show. Trading volumes in Shanghai were 46 percent below the 30-day average.
The CSI 300 Index declined 2.9 percent. Hong Kong’s Hang Seng China Enterprises Index was little changed, while the Hang Seng Index retreated 0.3 percent.
Gauges of technology and material stocks on the CSI 300 slumped more than 4 percent for the biggest declines among industry groups. Searainbow Holding Corp. and Yunnan Copper Co. both tumbled by the 10 percent daily limit.
The 569 open-ended mainland Chinese stock funds had combined net asset values of 724.8 billion yuan ($113.8 billion) in August, compared with 1.3 trillion in July, according to data posted on the website of the Asset Management Association of China on Monday. The industry body didn’t explain the reason for the decline.
----Margin
traders reduced holdings of shares purchased with borrowed money on Monday,
with the outstanding balance of margin debt on the Shanghai Stock Exchange
falling to a nine-month low of 599.9 billion yuan ($94.2 billion).
More
Iraq warns oil companies of spending cuts
Published: Sept 14, 2015 5:56 a.m. ET
Iraq's oil ministry has issued a stark warning to the international oil
companies running its energy sector that it will slash spending in 2016 as the
country feels the full effect of low crude prices and the fight against Islamic
State.
A Sept. 6 letter from an oil ministry official is fresh evidence that
Iraq is struggling to maintain a swift expansion of its energy sector that has
made it the Organization of the Petroleum Exporting Countries's second-largest
producer with 4 million a barrels a day or more this summer.
The letter--addressed to "all contractors" and reviewed by The
Wall Street Journal--warned big oil companies in Iraq such as Eni SpA of Italy,
Russia's Lukoil Holdings, Anglo-Dutch firm Royal Dutch Shell PLC and U.K. giant
BP PLC to submit conservative funding requests in 2016. Independent energy
companies maintain and expand Iraq's fields with government money and are
reimbursed for production with oil.
"Because of the drop in our oil-sales revenues, the Iraqi
government has sharply reduced the funds available to the Ministry of
Oil," the official, Abdul Mahdy al-Ameedi, wrote. "This will...reduce
the funds available for the reimbursement of petroleum costs to our
contractors."
Mr. Ameedi also wrote that the oil ministry didn't expect lower funding
to "reduce production from the levels that were [already]
stipulated."
Mr. Ameedi and the oil ministry didn't respond to requests for further
comment.
More
Schools Shut, Flights Diverted as Southeast Asia's Haze Worsens
September 15, 2015 — 2:53 AM BST
The haze blanketing parts of Southeast Asia worsened as smoke from
Indonesian forest fires forced Malaysia to close schools in some states and
divert flights, and put Singapore’s Formula One race at risk after other
outdoor events were canceled.The city-state’s three-hour pollutant index surged to 249 as of 9 p.m. on Monday, the highest this year and crossing into the "very unhealthy" range for a second day. In neighboring Malaysia, the air quality reached unhealthy levels in Kuala Lumpur and several states, leading to school closures in those areas, the Star reported.
Singapore Environment Minister Vivian Balakrishnan reiterated the city-state’s concerns about the haze to his Indonesian counterpart Siti Nurbaya, and extended its offer to help. Indonesia also agreed to share the names of companies suspected to have caused the fires, the city-state’s National Environment Agency said. The blazes are often started to clear land for plantations.
Organizers of the Formula One night race in Singapore this weekend, which will also include outdoor concerts by Maroon 5 and Bon Jovi, said they have a "contingency plan" for the haze and will work with relevant agencies before making any decisions on the event.
The low visibility also affected flights out of Sepang, outside Kuala Lumpur, according to AirAsia Bhd. About 29 flights were either delayed, diverted or canceled Monday because of the haze, the low-cost carrier said. Flights in the northern Penang state and Kuching in east Malaysia were also affected in the past week, the airline said.
More
We close for the day with dying Europe. Problems multiply, solutions don’t.
Former Greek finance minister says reworking debt critical
Published: Sept 14, 2015 7:50 p.m. ET
Euclid Tsakalotos says political forces in Europe didn’t want to see a left-wing government succeed
The former finance minister who signed the deal to keep Greece in the eurozone believes a renegotiation of his country’s debt is the key to the future of its economy.But Euclid Tsakalotos, who replaced Yanis Varoufakis in the Greek ministry of finance and negotiated the controversial €86 billion ($97 billion) bailout in exchange for austerity measures, said in an interview with MarketWatch that pressure from “hostile” creditors may prevent that renegotiation.
Tsakalotos is considered by Greek political analysts to be one of the two candidates most likely to become finance minister—current interim-finance minister George Chouliarakis being the other—should the left-wing Syriza party, led by incumbent Prime Minister Alexis Tsipras, win Sunday’s parliamentary election. Syriza and center-right opposition New Democracy have been running neck-and-neck in recent polls.
One of the Syriza government’s biggest wins, according to Tsakalotos, was a commitment from Greece’s creditors to initiate talks on debt renegotiation after a review process in which Greece would present its progress on the implementation of the reforms agreed upon in the bailout. The evaluation is scheduled to begin in October.
In an interview in his office in Athens, Tsakalotos, a father of three, compared past promises to renegotiate Greece’s debt to “when my children say ‘Take me to London’ and I say ‘Yes, sometime.’”
Now, Tsakalotos worries that there will be “pressure by some of Greece’s hostile creditors to make the first evaluation so difficult that we never get to discuss the debt. This is something that concerns me and would be in bad faith.”
The International Monetary Fund deemed Greece’s debt unsustainable in mid-July, saying the eurozone must commit to debt restructuring if the bailout program is to work. Former finance minister Varoufakis had repeatedly asked for debt relief during the negotiations earlier this year, but the Eurogroup of the eurozone’s finance ministers has so far refused to consider it.
More
Again,
it may be said that we need not be alarmed at the magnitude of our credit
system or at its refinement, for that we have learned by experience the way of
controlling it, and always manage it with discretion. But we do not
always manage it with discretion. There is the astounding instance of Overend,
Gurney, and Co. to the contrary. Ten years ago that house stood next to the
Bank of England in the City of London; it was better known abroad than any
similar firm—known, perhaps, better than any purely English firm. The partners
had great estates, which had mostly been made in the business. They still
derived an immense income from it. Yet in six years they lost all their own
wealth, sold the business to the company, and then lost a large part of the
company's capital. And these losses were made in a manner so reckless and so
foolish, that one would think a child who had lent money in the City of London
would have lent it better. After this
example, we must not confide too surely in long-established credit, or in
firmly-rooted traditions of business. We must examine the system on which these
great masses of money are manipulated, and assure ourselves that it is safe and
right.
Walter Bagehot. Lombard Street. 1873
At the Comex silver depositories Monday
final figures were: Registered 50.45 Moz, Eligible 116.41 Moz, Total 166.86
Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
No bent and crooked banksters and politicians today, just another
update on our developing strong El Nino weather event in the Pacific. Will it
end California’s drought? Probably not, though it ought to get pretty wet, and
snowy at the higher elevations.El Niño this year: What will it bring?
An El Niño is building that’s expected to culminate in the fall and last until the winter and could possibly become a “mega” El Niño.
Release
Date: Sep 14, 2015
By Catherine
Gautier, University
of California, Santa BarbaraAs the summer ends, heat is dominating the meteorological landscape, with the warmest month ever recorded and the drought continuing unabated in California. At the same time, it is clear that an El Niño is building that is expected to culminate in the fall and last until the winter, with the possibility of it becoming a “mega” El Niño.
The hope in California is that the large amounts of precipitation usually associated with extreme El Niño events would lessen the impacts of the state’s multi-year drought by partly refilling reservoirs and groundwater, even as scientists caution that this might not happen to the degree needed to alter the present situation.
What drives the El Niño weather pattern and what do scientists know about El Niño under man-made greenhouse warming?
To be clear, El Niño is a tropical Pacific phenomenon, even though it represents the strongest year-to-year meteorological fluctuation on the planet and disrupts the circulation of the global atmosphere. When sea surface temperature changes – or anomalies – in the eastern equatorial Pacific exceed a certain threshold, it becomes an El Niño.
----As the central part of the Pacific warms up during El Niño, the atmospheric convection that normally occurs over the western warm pool migrates to the central Pacific. That transfer of heat from the ocean to the atmosphere gives rise to extraordinary rainfall in the normally dry eastern equatorial Pacific. Warm air then flows from the west, feeding this convection and further weakening the east-west-flowing trade winds.
This leads to further warming as this feedback loop amplifies the phenomenon and ensures that deep atmospheric convection and rainfall patterns are maintained in the central equatorial Pacific. El Niño eventually ends when changes in the ocean cause negative feedbacks that reverse the dynamics that create the El Niño effects.
How can El Niño affect weather in United States and rainfall in
California?
In association with El Niño, the heat redistribution in the ocean
creates a major reorganization of atmospheric convection, severely disrupting
global weather patterns from Australia to India and from South Africa to
Brazil.
What explains the specific effect on the US and California, however, is a
particular type of connection – called extratropical teleconnections – between
the heating generated by El Niño and North America. This heating excites wave trains,
or groups of similar-sized atmospheric waves, that propagate northward,
connecting the central equatorial Pacific to North America. This shifts the
subtropical jet stream northward and induces a series of storms over California
and the southern US, in general. The increased precipitation that ensues seems
to only occur during a strong
El Niño.While El Niños have a rather “typical” signature in the tropics, their impacts over North America vary because other influences act in temperate climates. Nevertheless, most El Niño winters are mild over western Canada and parts of the northern central United States, and wet with anomalous precipitation over the southern United States from Texas to Florida.
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?
Haydale To Develop Graphene Composite to Protect Planes from Lightning
Evan Milberg
September 14, 2015
Haydale
Composite Solutions (HCS) entered into a collaborative 18-month research
project with Cobham plc and SHD Composites Ltd to develop a composite
material that can withstand an aircraft lightning strike. The project will be
funded by a £150,000 grant from the National Aerospace Technology Exploitation
Programme (NATEP).Carbon fiber has been used extensively in aircraft. However, because carbon fiber epoxy composite materials are, by themselves, poor conductors of electricity, they have been prone to significant lightning damage. As a result, many aircraft companies have turned to copper and aluminum, which conduct more electricity, but add significant weight and cost.
This research will develop a solution by developing highly electrically conductive epoxy resins using alternate forms of graphene. This will create a highly conductive carbon fiber reinforced epoxy composite material. The new composite material will help eliminate metallic meshes to create safer aircraft, while reducing weight and costs from competing materials.
“We are very excited about developing highly conductive carbon fibre reinforced epoxy composite materials and structures, which require no additional parasitic lightning strike protection,” said HCS Managing Director Gerry Boyce. “The ability to add graphene to change one of the fundamental characteristics of the base resin, in this case, electrical conductivity, is a most important development for composite engineers and could lead to a whole new generation of graphene-enhanced composite materials.”
Cobham plc will consult on lightning strike testing, SHD Composites Ltd will supply the carbon fiber reinforced epoxy resin pre-impregnated fabric, and HCS’ “HDPlas” process will be used to develop the graphene enhanced epoxy resins for the project.
More
The monthly Coppock Indicators finished August
DJIA: +65 Down. NASDAQ:
+168 Down. SP500: +92 Down.
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