Contagion Spreads.

Baltic Dry Index. 873 -03       Brent Crude 49.78

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

As the number of victims affected mounted up, burial grounds became overfull, and pits were dug to accommodate the dead. Drivers of dead-carts travelled the streets calling "Bring out your dead" and carted away piles of bodies.

The Great Plague of London 1665-1666.

The fallout from China’s hard landing continues to build and spread. Yes, Janet, Mark and Mario, “this time it’s different.”  It’s not “Bubbles Greenspan” and Bernocchio’s Great Rigged Illusion market any more. In the real world, we seem to have arrived at something far closer to the end of the infamous “crack-up boom”. Something no ex-Goldmanite central bankster saw coming. But when was the last time any central bankster ever said “warning, recession or worse dead ahead.”  In Wall Street, Great Vampire Squid, casino world, it was back to party time again, as everyone bet on the Chinese cavalry riding in to the rescue. Just one small nagging thing, China doesn’t have any cavalry. They were wiped out in the Great Chinese rout in their stock market round trip.

Dow jumps 390 points in second-biggest gain of 2015

Published: Sept 8, 2015 4:34 p.m. ET

U.S. stocks ended sharply higher Tuesday with the main indexes posting their second-largest daily gains of the year.

Stocks rebounded from last week’s rout as investment funds repositioned their portfolios in the wake of the Labor Day holiday and market participants were cheered by rising expectations for additional economic stimulus measures by Chinese authorities.

The S&P 500 SPX, +2.51%  closed 48.19 points, or 2.5%, higher at 1,969.41, with all 10 main sectors finishing sharply higher. Among the 502 issues on the S&P 500, only 11 ended in negative territory.

Health-care and technology sectors led the gain, advancing 2.9% and 2.8%, respectively.

The Dow Jones Industrial Average DJIA, +2.42%  jumped 390.30 points, or 2.4%, to 16,492.68, with all of its 30 components closing in positive territory, led by General Electric GE, +4.00% up 4% on news that European Union is set to approve its $17 billion acquisition of Alstom SA’s ALO, +1.40%  power business.

The Nasdaq Composite COMP, +2.73%  ended the day up 128.01 points, or 2.7% at 4,811.93, with biotechnology stocks leading the gains. The iShares Nasdaq Biotechnology ETF IBB, +4.35%  rose 4.4%.

Advances by U.S. stocks followed gains in Europe and Asia as weak export data in China, released overnight, fueled bets that Beijing might be inspired to implement further measures to boost the country’s sluggish economy.
More
http://www.marketwatch.com/story/china-stimulus-hopes-send-us-stock-futures-sharply-higher-2015-09-08?dist=tcountdown

Chinese economy: China's economic outlook remains poor as imports fall 14.3 per cent

8 September 2015 6:43am

It looks like we haven't seen the end of weak data from China, after new data revealed both imports and exports fell in August.

China’s imports in August fell 14.3 per cent in yuan-denominated terms from last year, against an 8.6 per cent decline in July - the figure's 10th consecutive decline in imports.

Meanwhile, while exports fell 6.1 per cent, the picture was somewhat improved against the 8.9 per cent decline in July.

China’s trade surplus grew 40 per cent to 368bn yuan (£37.7bn).

Exports have been hit by weak global demand, while imports have been constrained by the slowdown in China’s domestic economy.

This comes after China recently revised its 2014 economic growth down from 7.4 per cent to 7.3 per cent, and just weeks after lower-than-expected manufacturing figures sparked market turmoil around the world, including in China.
More
http://www.cityam.com/223834/chinese-economy-chinas-economic-outlook-reamins-poor-are-imports-and-exports-fall?utm_medium=Email&utm_source=Email&utm_campaign=150908_CMU

Meanwhile in real news, China seeks to establish its own pricing mechanism for crude oil. Who needs Brent and West Texas Intermediate to price China and Asia’s oil. In fact, with China the number one global consumer of oil and likely to remain so all century, who need to price oil in Uncle Scam’s dollars at all? At this point the prudent will be swapping some more paper for fully paid up physical gold and silver, ahead of the rest of the 21^st century.

Below, more on contagion spreading.

China’s new oil contract signals shift from Brent and US dollar

New Chinese oil contract will challenge the dollar's dominance as the primary currency for trading commodities

By Andrew Critchlow, Commodities editor 9:05AM BST 07 Sep 2015

Brent crude has been the global benchmark against which most oil is measured ever since the field from which it draws its name was discovered in the 1970s.

The first Brent futures were introduced in 1988 as a way for traders and refineries to smooth out volatile price movements and stabilise the market, which was being increasingly dictated by Middle East producers and the world’s largest consumers in the US.

Initially, the contract only comprised light-sweet crude oil from the Brent field in the North Sea, but then was broadened to include a blend of high-quality oil from 15 different areas in the province. Today, the contract comprises oil from just four fields: Brent, Forties, Oseberg and Ekofisk.

Despite declining production in the British side of the North Sea and the start of decommissioning part of the Brent field itself, the contract is still used as a reference against which about two-thirds of the world’s oil is priced. The high quality of the oil makes it ideal for refining into high-grade diesel, petrol and other petroleum products. Because it is largely delivered by ship, it can also be easily distributed anywhere in the world.

Although it accounts for only about 1m barrels per day (bpd) of physical supply, compared with world demand of around 92m bpd, Brent crude remains the Dom Pérignon of tradable oil.

However, its role as the preferred global benchmark is soon to be challenged by a new contract that is expected to be offered to the market next month. China is thought to be plotting the downfall of Brent and its US cousin, West Texas Intermediate (WTI), as the world’s second largest economy seeks to gain more control over the pricing of its main source of energy. The Chinese are expected to launch their own global crude contract as early as next month. Unlike Brent and WTI, the new contract will be priced in China’s yuan instead of US dollars.

To be traded on the Shanghai International Energy Exchange to compete with the existing global benchmarks, traders are already talking about the new benchmark potentially superseding these more established crude futures contracts.

The launch of the Chinese contract is also a reflection of Beijing’s growing influence over world energy and commodities markets. China has now grown to be the world’s second largest consumer of oil after the US and is quickly closing the gap as more of its gigantic population aspire to the trappings of a middle-class lifestyle such as a family car. Oil companies such as Royal Dutch Shell have plans to open hundreds of new filling stations in China to meet expected demand from the country’s burgeoning transport sector.

Developing a futures contract is the logical next step for China now that it has developed into a major power in the physical market for crude oil.
More
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/11848172/Chinas-new-oil-contract-signals-shift-from-Brent-and-US-dollar.html

Alibaba lowers second-quarter gross merchandise volume estimates

Tue Sep 8, 2015 2:39pm EDT

Alibaba Group Holding Ltd (BABA.N) said on Tuesday it expected second-quarter gross merchandise volume (GMV) to be lower than its initial estimates due to weaker consumer spending in China.

The company's shares reversed course and slipped as much as 3.1 percent to $61.91 in late afternoon trading. They had earlier gained as much as 4.5 percent.

Alibaba said it now expects GMV to be lower in mid-single digits on a percentage basis from its earlier estimates.

---- Gross merchandise volume is the total value of transactions made on Alibaba's platforms and is one of the most closely watched metrics for e-commerce companies.

The company also said its expects growth in its AliExpress business to slow to low double digits for the quarter ending September due to weakening currencies in markets such as Russia and Brazil.

More
http://www.reuters.com/article/2015/09/08/us-alibaba-forecast-idUSKCN0R82EQ20150908

Shrinking Iron Ore Imports Yet Another Sign of China Slowing

September 8, 2015 — 5:03 AM BST Updated on September 8, 2015 — 9:28 AM BST

China’s iron ore imports contracted last month, adding to evidence that a deepening slowdown in the world’s second-biggest economy is hurting demand for raw materials.

Inbound cargoes fell 14 percent to 74.12 million metric tons from 86.1 million tons in July, which was the highest level this year, according to customs data Tuesday. Imports for the first eight months declined 0.2 percent to 613 million tons.

After decades of rapid growth and an unprecedented expansion in steel production, China is now grappling with excess capacity as a property-led slowdown crimps demand. Iron ore prices tumbled in July to their lowest in at least six years as surging low-cost output from Rio Tinto Group in Australia and Brazil’s Vale SA swamped the market. Deadly explosions at Tianjin port last month also disrupted shipments and may have reduced the import figure, according to Shenhua Futures Co.

“The latest trade figures probably bore out the impact from the Tianjin blast though the effect wasn’t huge,” Wu Zhili, a Shenhua analyst in Shenzhen, China said by phone. “China’s weakening demand is the broader trend. Iron ore imports probably peaked last year so we’ll see purchases sustained at current levels or slightly lower.”

----The slowing economy and a weak property sector have hurt domestic steel demand, curbing output and iron ore purchases. Mills in the world’s biggest producer are still making more steel than the economy needs as they benefit from cheap ore, Lourenco Goncalves, chief executive officer of Cliffs Natural Resources Inc., said in an interview last month.

The surplus is spilling onto world markets. Steel-product exports were sustained in August around the highest since January, adding to a flood that has battered global prices. Outbound shipments were 9.73 million tons, 25 percent more than a year earlier, according to customs. Exports in the first eight months climbed 26.5 percent from a year earlier to 71.9 million tons.

More
http://www.bloomberg.com/news/articles/2015-09-08/shrinking-iron-ore-imports-yet-another-sign-of-china-slowing

Emerging Market Bets Turn Sour for Standard Chartered, Santander

September 8, 2015 — 1:00 AM BST

European banks that staked their growth on emerging markets face a worsening profit outlook as turmoil roils economies from Asia to South America.

Standard Chartered Plc’s Bill Winters, who took over as chief executive officer in June, may see bad loans soar in Asia, where the bank makes most of its profit. Banco Santander SA and Banco Bilbao Vizcaya Argentaria SA, Spain’s largest lenders, both rely on income from Latin America as low interest rates limit growth at home.

China’s surprise yuan devaluation last month fueled concern the global economy is heading for a slowdown, even as the U.S. Federal Reserve prepares to raise interest rates for the first time in nine years. Currencies from Malaysia to Turkey to Brazil tumbled, while an index of commodities fell to its lowest since 1999 last month.

“Standard Chartered has experienced the unfortunate double whammy of a commodity price slump and emerging-market currency pain damaging both its growth and credit-quality outlook,” said Jonathan Tyce, senior banks analyst at Bloomberg Intelligence. “Roughly 20 percent of BBVA’s and Santander’s loan book is in Latam, so they have suffered a shift in sentiment.”

Standard Chartered shares fell the most among European banks outside Greece since the beginning of August. Santander, BBVA and HSBC Holdings Plc also tumbled more than an index of European bank stocks.

Spokesmen for all four lenders declined to comment for this article.

While a focus on emerging markets helped the banks weather the financial crises of recent years, it now leaves them exposed as those economies weaken. A blow to earnings would make it harder to build up capital without tapping investors. Santander, which already turned to shareholders for funds earlier this year, still has a lower capital buffer than many large European peers.
More
http://www.bloomberg.com/news/articles/2015-09-08/emerging-market-bets-turn-sour-for-standard-chartered-santander

Yet another measure of risk in junk-bond market flashing red

Published: Sept 8, 2015 5:05 p.m. ET

Yet another measure of risk in the U.S. junk-bond market is flashing an alarming signal.

Moody’s Investors Service said its Covenant Quality Index deteriorated to its worst level on record in August from July, blowing past the previous record low set in November 2014.

The index measures the degree of protection afforded to holders of junk, or high-yield, bonds sold by North American issuers. Covenants are provisions that aim to protect the credit quality of an issuer over time as a way to safeguard the bondholder’s investment. For the issuer, they are the strings attached to a deal that regulate its behavior and prevent it from further increasing its risk profile.

The Moody’s index uses a three-month rolling average covenant quality score that is weighted by each month’s total bond issuance. The scale runs from 1.0 to 5.0, where a lower score is a sign of stronger covenant quality, and a higher score is the opposite.

The index rose to 4.53 in August from 4.37 in July and 4.42 in November 2014. It is now a full 116 basis points weaker than its best-ever score of 3.37 set in April 2011.

“Single-month record weak scores in June and July drove the CQI to 4.53 in August for its worst score to date,” Moody’s analysts wrote in a report.

More
http://www.marketwatch.com/story/yet-another-measure-of-risk-in-junk-bond-market-flashing-red-2015-09-08?dist=tcountdown

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

At the Comex silver depositories Tuesday final figures were: Registered 51.21 Moz, Eligible 115.40 Moz, Total 166.61 Moz. 

Crooks and Scoundrels Corner

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

Today, doom, gloom and more doom, in mining. Still some good news for producers of Dr. Copper. Glencore is to close down about one fifth of its copper production in Zambia and Katanga. Bad news for Glencore, Zambia and Katanga, of course, but with supply about to get tighter, everyone else will get to produce more and sell at slightly higher prices.

Financing crunch leaves Codelco's investment plans in pieces 8th September 2015

By: Reuters

The ambitious investment plans of Chile's state-run copper producer Codelco are in tatters as it faces delays to mine expansions and keeps at least one unprofitable project running with global copper prices plumbing multi-year lows.

Expansion of the key Andina mine has been delayed by two years and a plan to take the century-old Chuquicamata mine underground is behind schedule, hampered by operational setbacks and financing and environmental concerns, company insiders say.

Meanwhile, Codelco, the world's No 1 copper supplier, is keeping unprofitable mines like Salvador open, apparently to protect jobs and save President Michelle Bachelet's leftist government more confrontations with unions.

"The juncture at this moment is awful," Carlos Caballero, head of Codelco's new Ministro Hales mine, told Reuters. Codelco's troubled outlook raises doubts over whether it will be able to bolster production to a targeted 2 million tonnes per year by 2026, from 1.67 million tonnes in 2014.

It also puts Bachelet in a difficult position because Codelco, hit by an end to the commodities boom, is generating less of the income she needs to finance ambitious and long-promised social programmes.

Codelco says it needs to invest $25-billion over five years to dig deeper at new and existing sites and keep production flowing. With copper prices at a six-year-low, the cash-strapped government has so far pledged just $4-billion in returned profits between 2015 and 2020. Codelco hands its profits to the state, and is funded in part by the return of some profit and in part by issuing debt. Last year, the government received some $3-billion profit from Codelco, the lowest level since 2003.

In 2012, the company paid $7.5-billion into Chile's coffers. Bachelet's government and Codelco now face a financing quandary. The government has pledged-billions of dollars for an overhaul of the education system and other social initiatives and is reluctant to promise more funds to Codelco at a time when the economy is struggling and copper prices are low.

But issuing more debt would hit Codelco's investment grade and returning the company to private hands is politically unpalatable.
more.
http://www.miningweekly.com/article/financing-crunch-leaves-codelcos-investment-plans-in-pieces-2015-09-08

Glencore Plans Copper Stoppage in Africa as Prices Bite Miners

September 7, 2015 — 10:14 AM BST

Glencore Plc’s suspension of two African mines will cut its copper output by nearly a fifth, a move that lifted prices in one of the world’s major metals markets that isn’t heavily oversupplied.

Glencore is reviewing copper production at its Mopani operation in Zambia and the Katanga facility in the Democratic Republic of Congo in light of the “challenging environment for commodities,” it said in a statement. Plunging prices are forcing miners to consider cutting production or delaying new projects to save money and mitigate oversupply.

The Baar, Switzerland-based commodity producer and trader is restructuring its operations and finances in a bid to cut around a third of its $30 billion debt. Metals prices at six-year lows have pummeled mining company stocks and
prior to its announcement the company had lost more than half its market value this year.

Earlier Monday, the copper chief at rival miner and one-time Glencore target
Rio Tinto Group said the market for the red metal is “slightly oversupplied but not in a material way.” Speaking before Glencore’s announcement, Jean-Sébastien Jacques said in an interview in Singapore that copper’s supply-demand is “not far away from being balanced.”

That contrasts with minerals such as iron ore, where prices have collapsed after major miners ramped up supply to increase market share, and other metals used in steelmaking such as nickel.

More

http://www.bloomberg.com/news/articles/2015-09-07/glencore-plans-copper-stoppage-in-africa-as-prices-bite-miners

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 21^st century onwards? DC? A quantum computer next?

Bad times, it seems, are spreading everywhere. Whatever happened “to infinity and beyond” in central bankster funding? Increasingly, it now looks like our crooked, fiat currency, central banksters, using QE Forever and ZIRP after their last bubble crash of 2008-2009,  merely set off a global von Mises “crack-up boom” Anything that can go wrong now seems to be going wrong.

EU ProSun requests extension of trade duties as old battlelines redrawn

08 September 2015, 8:51 Updated: 08 September 2015, 9:24

EU ProSun has formally requested an extension of existing solar trade tariffs placed on Chinese manufacturers in the EU.

The move, which was widely expected, is likely to reopen divides among the industry that reached fever pitch in 2013 when the current measures were announced.

While protocol prevents comment on the matter from the European Trade Commission, a 'frequently asked questions' document circulated by ProSun tacitly confirms that it met the 7 September deadline to request an expiry review of the current measures. These are set to conclude on 7 December 2015.

If the EU agrees to the review, current duties and the minimum import price (MIP) structure agreed between Brussels and Beijing will remain in place until the investigation is complete. This will take a maximum of 15 months extending the trade defence restrictions until the end of 2016. A number of companies, including Canadian Solar and ReneSola, have been removed from the MIP.

In the FAQ document, ProSun claims to represent more than 25% of what it claims is Europe’s 6GW solar manufacturing industry. It also claims to have secured support from more than 100 installers in a period of two weeks. Typically in anti-dumping cases, installers oppose measures on the basis that they could drive up the cost of panels for them.

Anti-dumping measures typically last five years but the solar case was limited to just two years initially by former trade commissioner Karel de Gucht. This was in recognition of the fast pace of industry changes. ProSun has highlighted that he indicated that a review would be necessary after the two years were concluded.

James Watson, CEO of trade body SolarPower Europe said it was important for the sector for the MIP to be removed. SolarPower Europe, formerly EPIA, has changed its stance on the trade dispute from neutral to pro-free trade since the measures entered force in 2013.

“The removal of the MIP will help solar power in Europe to grow and support the European electricity market in achieving its challenging emission reduction goals,” Watson told PV Tech. “Consumers will be able to buy quality products manufactured at scale, at the best possible prices. State support for solar deployment can be limited to the absolutely necessary, with more kilowatt-hours being achieved for less cost following the continuously falling manufacturing costs of solar system components.”

More

http://www.solarpowerportal.co.uk/news/eu_prosun_requests_extension_of_trade_duties_as_old_battlelines_redrawn_342

“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.

The monthly Coppock Indicators finished August

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