Baltic Dry Index. 917 -06 Brent Crude 48.07
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Bulls make money, Bears make money, but Pigs get slaughtered.
Wall Street adage.
Is Volkswagen “the next Lehman?” Of course, it’s too early to say. But the wheels have come flying of VW, and it couldn’t have happened at a worse time in our slowing global economy, nor in a worse way. This wasn’t an accident after all. This was a deliberate corporate attempt at illegal activity. For more on the growing VW scandal, scroll down to Crooks Corner.
We open with the return of the Bear? Well not quite, that’s also still too early to tell. But if it walks like a bear, roars like a bear, and eats investors like a bear, watch out. Spreading deflation contagion from China, is all too likely to sink a whole lot of rotting corporate hulks.
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
The bear market has begun
Published: Sept 23, 2015 11:33 a.m. ET
----Today we are getting
significant volatility as the world starts to wake up to the reality that global growth will never be the same again. The question many
have now is "are the markets going to have another 2008-like crash?"
I don't think so, but folks should begin to accept that we are going to have at
least a normal bear market. In fact, the bear market has already begun.Here are a pair of charts from one of the quants that I subscribe to.
In the S&P 500 chart below, you will see the long-term patterns going back to 1970. The "strategic number" is an algorithmic measure comprised of multiple factors which measure risk. When it is close to 100, risk is very high. When it is close to 0, risk is very low. In between, risk is about normal, and trend following can be employed. The "strategic risk range" shows the rough range that the market is likely to be in during the intermediate term.
What
we can expect is that without renewed buying pressure to continue the trend
upward — unlikely given the risk numbers and new downward trend — that the
market has quite a large potential drop that it can sustain in coming months or
quarters. The bottom of the range is around 1200 on the S&P 500 — over a
30% drop from here. Due to all of the intervention of central banks and
governments recently and likely coming, I don't expect the S&P 500 will
fall any further than about 1200 and might not quite make it all the way there
at all, as there is a lot of money on the sidelines. Investors need to be aware
of that risk, though.
More
U.S. stocks finish lower for 2nd day as oil rally runs out of gas
Published: Sept 23, 2015 4:42 p.m. ET
U.S. stocks closed lower for a second day in a row Wednesday, shedding
modest early morning gains, after a rebound in crude oil prices fizzled out. Gloomy data pointing to decelerating growth in China and tepid improvement in the eurozone’s manufacturing sector, adding to the market’s slump.
The S&P 500 SPX, -0.20% declined 3.98 points, or 0.2%, at 1,938.76 after trading up 7 points and down as many as 10 points earlier in the session. Six out of 10 main sectors traded lower, with materials and energy leading the decline.
The Dow Jones Industrial Average DJIA, -0.31% shed 50.58 points, or 0.3%, to end the day at 16,279.89. The blue-chip index had traded up as many as 25 points and down as many as 118 points earlier in the session. Shares of Caterpillar Inc. CAT, -2.06% and Boeing Co. BA, -1.73% were the biggest drags on the Dow.
More
Asia subdued amid lingering global growth woes, euro steady
Worries that an eventual tightening in U.S. monetary policy and slower growth in China could knock the global economy have scared off investors, particularly those invested in stocks and commodities.
MSCI's broadest index of Asia-Pacific shares outside Japan crawled up 0.2 percent after having posted their biggest single-day fall in almost a month the previous day.
Shanghai shares gained 0.7 percent after losing more than 2 percent on Wednesday, while South Korea's Kospi nudged up 0.4 percent. Hong Kong's Hang Seng, however, shed 0.6 percent.
Japan's Nikkei average, opening for the first time since Friday after a string of national holidays, tumbled 2.3 percent, edging near its seven-month low touched earlier this year. Shares of Japanese automakers sagged in a delayed reaction to the Volkswagen (VOWG_p.DE) diesel emissions scandal.
The scandal has raised fears among economists that it could develop into a major threat to Europe's largest economy.
Wall Street also lost ground on Wednesday, dragged down by economic reports portraying U.S. factory growth as tepid and China in its worst manufacturing contraction since the global financial crisis.
More
Weak factories data weigh on shares; oil slips
Wall Street stock prices slid on Wednesday, dragged down by economic
reports portraying U.S. factory
growth as tepid and China in its worst
manufacturing contraction since the global financial crisis.
The data aggravated investor anxieties that global economic growth might
be sputtering, sapped a rally in European equities and gave Asian stock markets
their worst day in months.
Prices of U.S. Treasuries eased, while oil prices declined as much as 4
percent after giving up early gains.
The economic reports, showing U.S. manufacturing growth stayed at a
two-year low in September and Chinese factory activity shrinking to a 6-1/2
year low, spurred a selloff in U.S material and industrial stocks.
---- Europe's FTSEuroFirst index of leading 300 European shares had rallied on regional manufacturing reports but ended flat with a rise of 0.07 percent.
Shares in Volkswagen (VOWG_p.DE) rose 5.2 percent to 111.50 euros. It had lost about a third of its value in the previous two sessions after the German carmaker got caught up in a scandal that Deutsche Bank
called an "investor's nightmare," which led to the resignation of CEO
Martin Winterkorn on Wednesday. The United States has accused Volkswagen of rigging its cars to conceal their emissions when the engines were tested.
Asian equity markets tumbled after the Chinese purchasing managers index intensified fears that a slowdown in the world's second-largest economy will spread more widely.
Asian stocks posted their biggest single-day fall since Aug. 24, with MSCI's broadest index of Asia-Pacific shares outside Japan down 2.4 percent.
Treasuries prices fell along with German Bunds. The benchmark 10-year Treasury last yielded 2.162 percent, reflecting a decline in price of 10/32.
More
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
Wednesday final figures were: Registered 45.71 Moz, Eligible 120.63 Moz, Total
166.34 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Yes Volkswagen again. Below, VW with malice aforethought. Whatever else VW’s geniuses were thinking, it wasn’t about the health of their fellow mankind. Germans trash Germany again. You couldn’t make this sort of egregious corporate behaviour up. I suspect that the duped world will not be kind to VW. The “Green Nazis” are going to demand more than a mere pound of flesh.
Volkswagen could pose bigger threat to German economy than Greek crisis
Volkswagen is the biggest of Germany's car makers and one of the country's largest employers, with more than 270,000 jobs in its home country and even more working for suppliers.
Volkswagen Chief Executive Martin Winterkorn paid the price for the scandal over rigged emissions tests when he resigned on Wednesday and economists are now assessing its impact on a previously healthy economy.
"All of a sudden, Volkswagen has become a bigger downside risk for the German economy than the Greek debt crisis," ING chief economist Carsten Brzeski told Reuters.
"If Volkswagen's sales were to plunge in North America in the coming months, this would not only have an impact on the company, but on the German economy as a whole," he added.
Volkswagen sold nearly 600,000 cars in the United States last year, around 6 percent of its 9.5 million global sales.
The U.S. Environmental Protection Agency said the company could face penalties of up to $18 billion, more than its entire operating profit for last year.
More
VW Cheating Added Pollution of as Many as 19 Million U.S. Cars
September 23, 2015 — 6:56 PM BST
Volkswagen AG bragged its diesel models were some of the cleanest on the
highways. In fact, they added the equivalent of as many as 19 million
chemical-spewing cars to American roads.
Based on the Environmental Protection Agency’s estimate
that 482,000 vehicles in the U.S. were polluting as much as 40 times the
legal limit, that equals almost 12,000 additional tons of nitrogen oxide
pollutants per year.
“We are very concerned that there are a lot of emissions involved and
the public is being harmed,” Frank O’Donnell, president of the non-profit
advocacy group Clean Air Watch in Washington. “We are going to demand that the
government forces Volkswagen to fix this.”
Estimates of additional pollutants emitted since 2009 raise questions about possible harm to human health and may become the basis for massive penalties sought by the EPA. Nitrogen oxides combine with other chemicals in the air to form the most common form of smog, which can cause a burning sensation in the lungs and trigger respiratory disease.
O’Donnell said his group believes the illegal emissions were so enormous that the U.S. government should force VW to find ways to make restitution, such as funding cuts of similar power-plant emissions.
“Paying a fine would not be adequate in our opinion,” he said. “They are going to have to come up with ways to reduce emissions further.”
The VW vehicles were programmed to activate pollution-control equipment while being tested for compliance with EPA and the California Air Resources Board standards, ensuring that emissions met legal standards. Afterward, the car’s software switched off the controls so the cars’ performance was maximized while allowing far higher pollutant levels.
Such software modifications are permitted in some cases, but must be disclosed to the EPA. VW didn’t tell EPA about the existence of the software until it was threatened with a halt to sales of its 2016 models, according to agency documents.
Volkswagen Chief Executive Officer Martin Winterkorn stepped down Wednesday after nearly a decade at the helm after company shares plunged and the automaker set aside $7.3 billion in an initial tally of costs of the emissions scandal. Winterkorn had vowed to get to the bottom of the scandal and promised to do everything possible to prevent such an incident from happening again.
Coal Plant
While it’s impossible to say precisely how much of the NOx gases were released, data from the EPA and other U.S. agencies allow estimates of the totals.The EPA said Sept. 18 that four VW vehicle models and one built by Audi sold between 2009 and this year were polluting from 10 to 40 times above “compliant levels,” depending on whether they were driven in stop-and-go conditions or on the highway.
If those cars were driven the U.S. average of about 11,000 miles a year and they polluted at the highest level estimated by EPA, it would be the equivalent of adding one large coal-burning power plant in the U.S., according to John Walke, clean air director and senior attorney at the Natural Resources Defense Council.
Even assuming that cars were driven in a mix of conditions -- polluting at 25 times legal limits -- the VW and Audi diesels would emit about 7,500 tons of NOx. That equals about 12 million cars with emissions at the legal limit of .05 grams of NOx per mile.
More
Volkswagen and the EPA's Dirty Little Secret
44
Cheating reflects badly, first and foremost, on the cheater -- and so it is
with Volkswagen, whose shocking
manipulation of U.S. emissions tests continues to exact a price in market
value, legal
costs and reputation.
At the same time, it's not unreasonable to ask how the cheating happened in the
first place, and that question implicates more than just Volkswagen.For years, automakers have been able to exploit lax testing systems in the U.S. and Europe. Regulators owe it to both car buyers and the environment to make these systems more rigorous.
As things work now in the U.S., carmakers test their own vehicles and send the results to the Environmental Protection Agency, whose engineers review them and, usually, apply a rubber stamp. The EPA allows manufacturers broad latitude in determining test conditions, an invitation to hanky-panky. The agency does some independent, random testing -- but on just 10 percent to 15 percent of new models. Only in rare cases does it test cars that have actually been driven off the lot.
The problems with this regime were obvious even before VW's shenanigans. In 2013, Consumer Reports found that 55 percent of hybrids and 28 percent of turbocharged cars fell short of their EPA fuel-efficiency ratings. Last year, the Justice Department reached a $350 million settlement with Hyundai and Kia for overstating gas mileage. Ford, Mercedes, Mini and other manufacturers have restated their official mileage ratings in the last three years, usually under threat of consumer lawsuits.
Europe, where automakers also test their own vehicles, has its own issues. Just before the VW scandal broke, a European environmental advocacy group released test results showing major discrepancies between lab and real-world emissions in cars made by BMW, Mercedes and Opel. The European Commission has announced that all passenger cars will be undergo "real world" emissions testing starting in 2017.
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?
How much bulk energy storage is needed to decarbonize electricity?
Published on September 22, 2015
at 6:25 AM
Much
of the nation's energy policy is premised on the assumption that clean
renewable sources like wind and solar will require huge quantities of storage
before they can make a significant dent in the greenhouse gas emissions from
electricity generation.
A new Harvard study pokes holes in that conventional wisdom. The analysis published today in the journal Energy & Environmental Science finds that the supply of wind and solar power could be increased tenfold without additional storage.
"There's no question that it would be better to have more and better storage and a sensible long-term strategy for the grid will have much more storage than today," said coauthor David Keith, Gordon McKay Professor of Applied Physics at Harvard John and Paulson School of Engineering and Applied Sciences (SEAS) and Professor of Public Policy at the Harvard Kennedy School. "But you don't have to wait for that before deploying more variable renewables."
The parametric study conducted by Keith and SEAS graduate student Hossein Safaei asked: In order to drastically reduce planet-warming carbon emissions from electricity generation, what amount of "bulk electricity storage" - technologies that can store electricity for hours at a time, such as pumped hydroelectric facilities or flow batteries - is economically efficient?
More
How much bulk energy storage is needed to decarbonize electricity?
Received 11 May 2015, Accepted 04 Sep 2015
First published online 04 Sep 2015
First published online 04 Sep 2015
High cost and technical immaturity of bulk (multi-hour)
electricity storage (BES) systems are often cited as major hurdles to
increasing the penetration of intermittent renewables. We use a simple model to
assess the economics of BES under carbon emissions constraints. Size and
dispatch of a green-field generation fleet is optimized to meet a variable load
at a 15 minute time resolution. Electricity supply options are wind, gas
turbine, BES, and a generic dispatchable-zero-carbon (DZC) source as a proxy
for fossil fuel plants with carbon capture or nuclear plants.
We review the cost of selected BES technologies and
parameterize the performance of storage, focusing on the energy- and
power-specific capital costs. We examine sensitivity of the electricity cost to
storage performance under a range of emissions constraints. Availability of
inexpensive BES systems in general and particularly electrochemical
technologies has a small impact on the overall cost of decarbonization.
Proportional reductions in capital costs of wind and DZC lower decarbonization
costs far more.
We find no economic justification for seasonal storage.
Intermittent renewables can be used to decarbonize the electricity supply with
a proportionally small requirement for BES because gas provides much of the
intermittency management even when the carbon emissions intensity is cut to
less than 30% of today's U.S. average. Substantial BES is required only when
emissions are constrained to nearly zero and DZC is not allowed.
The monthly Coppock Indicators finished August
DJIA: +65 Down. NASDAQ:
+168 Down. SP500: +92 Down.
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