Junk.

Baltic Dry Index. 855 -18       Brent Crude 47.08

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

My policies are based not on some economics theory, but on things I and millions like me were brought up with: an honest day's work for an honest day's pay; live within your means; put by a nest egg for a rainy day; pay your bills on time; support the police.

 
Margaret Thatcher

In our brave new Anti-Thatcher world of central bank rigged stock markets, Main Street reality keeps intruding into the banksters’ stock market casinos. It’s not Greenspan’s trickle down bubble fantasy world any more. In the real world, too much money has been lost from the central banksters’ fantasy wealth. Worse. Even more is in the process of being lost. In the west, consumers are tapped out and cutting back.  In the east, China’s stock market round tripped, impairing the shadow banking system. In Europe a largely US created Middle East war “migrant” tsunami is about to swamp all budgets, social safety nets, and jobs. We have yet to hear how many Syrian and Iraqi refugees America is willing to take and when. “Mad dog” McCain and Vicky Nuland and the American War Party are strangely silent on the human wreckage their policies created.

We have entered a new world of wealth destruction. The Great Correction is now underway. Very few in the west realise it yet. Most, including our ex-Goldmanite central banksters, still think we are in the Great Nixonian fiat money, promised casino land of milk and honey. That ended in the crash of 2007-2009. Since then we have been drinking in the central banksters’ last chance saloon of QE forever, ZIRP and NIRP. Suddenly they have run out of road and talent. We simply had too much of a good thing. As usual, hardly anyone, nations or individuals, saved for today’s rainy day. The BRICs have slammed into a brick wall. The G-7 riding their coattails are right behind.

U.S. Stocks Halt Global Rally as Oil Leads Commodities Lower

September 8, 2015 — 11:38 PM BST Updated on September 9, 2015 — 10:36 PM BST

A three-day rally in global equities faltered in the U.S.

American stocks failed to add to their second-biggest advance of the year, as early gains following a rally in Asia faded amid jobs data that bolstered the case for higher U.S. interest rates. Losses worsened in late 

Wednesday trading as Apple Inc. slumped after unveiling new products.

Oil led a selloff in commodities amid concern that supply gluts will persist, while Treasuries almost erased losses after strong demand at a government auction. Asia stocks extended gains, with Japanese shares jumping the most since 2008 amid signs that regulators in the region will be able to stabilize financial markets. European equities capped a three-day advance that was the longest since before China devalued its currency last month.

“We just came up way too fast yesterday and not a whole lot has changed, there’s nothing to sustain it,” Steve Bombardiere, an equity trader at Conifer Securities LLC in New York, said by phone. “We had these snapbacks in Asia but do we take our cue from them? We’re still waiting on the Fed and clarity from them and even now it seems like they just go with the wind.’

The Standard & Poor’s 500 Index fell 1.5 percent by 4 p.m. in New York, after rallying 2.5 percent Tuesday. The index rose as much as 1 percent to start the session, before a report showed job openings in July rose more more than forecast in the U.S., providing more evidence of a tightening labor market. Apple retreated 1.9 percent after jumping as much as 1.5 percent at the start of its presentation of new products, which included new iPhones and an iPad.

The Federal Reserve remains in focus for equities investors before next week’s meeting, with odds favoring an increase in interest rates by the end of the year.

More
http://www.bloomberg.com/news/articles/2015-09-08/asian-stocks-set-to-follow-u-s-rally-amid-pause-in-china-slump

In real world news, Brazil headed back to the good old days of the 1960s and 1970s. Ivan Glasenberg, and others,  gets a massive malinvestment wake up bill.

Brazil Credit Rating Cut to Junk by S&P Amid Budget Strain

September 9, 2015 — 11:06 PM BST Updated on September 10, 2015 — 4:59 AM BST

Brazil’s sovereign rating was cut to junk by Standard & Poor’s, taking away the investment grade the country enjoyed for seven years, as President Dilma Rousseff’s struggles to shore up fiscal accounts amid a faltering economy.

The country’s rating was reduced one step to BB+, with a negative outlook, S&P said in a statement after markets closed. Brazil’s largest U.S. exchange-traded fund tumbled 6.6 percent in late trading along with American depositary receipts for Petrobras, the state-controlled oil company.

The downgrade, and S&P’s warning that another cut is possible, puts pressure on the economic team led by Finance Minister Joaquim Levy to win passage of measures that would shore up the country’s fiscal situation by cutting spending or raising taxes. Rousseff has been unable to find support for her initiatives amid an investigation into corruption at the state-controlled oil company that allegedly occurred while she was its chairman, sending her popularity to a record low and generating calls for her impeachment.

“The downgrade could be a wakeup call but the political situation is so bad that it’s difficult to resolve, so its a dark path ahead,” Daniel Weeks, the chief economist at Garde Asset Management, said from Sao Paulo. "Markets will take this as a negative, and it will probably drag down emerging markets at a global level.”

More
http://www.bloomberg.com/news/articles/2015-09-09/brazil-credit-rating-cut-to-junk-by-s-p-amid-budget-strain

Billionaire Chief Faces $210 Million Bill as Glencore Seeks Cash

September 9, 2015 — 12:44 PM BST

Glencore Plc’s billionaire Chief Executive Officer Ivan Glasenberg is on the hook for as much as $210 million of the Swiss commodity trader’s looming $2.5 billion sale of new shares aimed at staving off a potentially disastrous credit rating cut.
 

The 58-year-old accountant turned coal trader, who has worked for the company for more than 30 years and is its second-largest shareholder with 8.4 percent, has vowed to maintain his stake by taking part in the sale. Glencore is considering a range of options for offering stock, including a simple share placement, a rights issue or a mandatory convertible bond.

The sticker price for Glasenberg of $210 million assumes Glencore raises the full amount.

The heads of its metals and energy units, Telis Mistakidis, Daniel Mate, Alex Beard and Tor Peterson, and Chief Financial Officer Steve Kalmin also face significant costs to uphold the company’s commitment that they won’t dilute their holdings. The combined bill for the executives plus Glasenberg may be $514 million, assuming the sale reaches $2.5 billion, Bloomberg calculations show.

Glencore announced this week a raft of measures to shore up its balance sheet, which is bulging under a $30 billion debt pile, including a pledge to cut borrowings by about a third to protect its BBB rating at Standard & Poor’s.

----The potential cost of the share purchases pales against the payouts Glencore’s senior executives have received since the company went public in a $10 billion initial public offering in 2011.

Glasenberg’s maximum participation represents about 27 percent of the $770 million of dividends he’s received during the past four years -- including the 6 cent-a-share payout announced last month that has yet to be paid.

More
http://www.bloomberg.com/news/articles/2015-09-09/billionaire-chief-faces-210-million-bill-as-glencore-seeks-cash

We end for today with Germany’s Error. By unilaterally declaring ignore the EU law, let them all come, no doubt out of guilt for 1933-1945, Germany triggered a people smuggler’s bonanza. Sadly, there are no good outcomes to this human crisis. President Putin was proved right on regime change in Syria. Assad was the best of a very bad choice. Now it’s too late of course.

Europe faces political war on two fronts as backlash builds

The EU's Eastern states shocked to lose their sovereignty over borders, just as southern Europe lost economic sovereignty by joining the euro.

By Ambrose Evans-Pritchard 9:47PM BST 09 Sep 2015

The European Union is fracturing along multiple lines of cleavage, torn by an emerging Kulturkampf over migrant flows before it has overcome the bitter conflict at the heart of monetary union.

“The bell tolls, the time has come,” said Jean-Claude Juncker, the head of the European Commission, in his State of the Union speech.

"We have to look at the huge issues with which the European Union is now confronted. Our Union is not in a good situation,” he said.

Perhaps it would be churlish to point out that the cause of this near existential breakdown is a series of moves that have his fingerprints all over them:

The fateful decision to launch the euro at Maastricht in 1991 without first establishing an EU political union to make it viable, and to do this despite crystal-clear warnings from experts within the Commission and the Bundesbank that it would inevitably lead to a crisis - the "beneficial crisis" as the EMU enthusiasts mischievously supposed.

The escalating treaties of Amsterdam, Nice and Lisbon, each concentrating power further in the hands of a deformed institutional system, sapping at the parliamentary lifeblood of the ancient nation-states that can alone be the fora of authentic democracy in Europe.

Above all, to destroy trust by overruling the categorical "No" of French and Dutch voters to the European Constitution in 2005, and bringing back the same treaty by executive Putsch, with a disgusted but complicit British prime minister signing the document in a side-room in Lisbon safely screened from the cameras.

One might have thought that the proper conclusion to draw is that the EU can only save itself at this stage by abandoning the Monnet method of treaty-creep and reflexive attempts to force integration beyond proper limits, and retreat instead to the surer ground of bedrock nation states wherever possible.

But no, Mr Juncker wishes to invoke treaty powers to force countries to accept 160,000 refugees by a quota, whether or not they agree with his solutions, or indeed whether or not they think it is highly dangerous given the state of total war that now exists between Western liberal civilisation and Jihadi fundamentalism.
More
http://www.telegraph.co.uk/finance/economics/11854259/Europe-faces-political-war-on-two-fronts-as-backlash-builds.html

Denmark blocks motorway and railway links with Germany to stop migrants

Danish police shut motorway and rail links with Germany to try and stem flow of refugees heading north to Sweden

By Our Foreign Staff 11:48PM BST 09 Sep 2015

Danish police closed a motorway and rail links with Germany on Wednesday in a bid to stem the flow of refugees heading north to Sweden, as Europe's migrant crisis spreads northward.

The motorway, a vital traffic artery for people and goods between the two countries, was closed when some 300 refugees, including children, began walking on it. Police tried to persuade them to leave but appeared reluctant to use force, witnesses said.

"We are trying to talk to them and tell them that it is a really bad idea to walk on the motorway," a police spokeswoman said.

Police also asked the state-owned railway operator to stop all trains between Germany and Denmark until further notice.

Vast numbers of people, many fleeing war and Islamic State of Iraq and the Levant in Syria, are trying to reach safety in EU countries willing to have them.
More
http://www.telegraph.co.uk/news/worldnews/europe/denmark/11855047/Denmark-blocks-motorway-and-railway-links-with-Germany-to-stop-migrants.html

“If you just set out to be liked, you will be prepared to compromise on anything at anytime, and would achieve nothing.”

Margaret Thatcher, On David Cameron?

At the Comex silver depositories Wednesday final figures were: Registered 51.21 Moz, Eligible 114.75 Moz, Total 165.96 Moz. 

Crooks and Scoundrels Corner

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

Today, thanks to the must read daily output of David Stockman’s excellent blog and newsletter, the best analysis of 2015 so far, in the US oil patch. Despite all the “drilling efficiencies” spin, unlike the Jewish tailor in the old joke, America’s frackers are not going to make up losses by “volume.” Even before any interest rate hike by the Fed dooms the American Fracking Debt Machines, America’s frackers have doomed themselves.

Rig Productivity Versus Per Barrel Costs In The Shale Patch——Calling Out The Red Herrings

by Oilprice.com • September 8, 2015

By Arthur Berman at Oilprice.com
Rig productivity and drilling efficiency are red herrings.

A red herring is something that takes attention away from a more important subject. Rig productivity and drilling efficiency distract from the truth that tight oil producers are losing money at low oil prices.

Pad drilling allows many wells to be drilled from the same location by a single rig.Rig productivity reflects the increased volume of oil and gas thus produced by each of a decreasing number of rigs. It does not account for the number of producing wells that continues to increase in all tight oil plays.

In other words, although the barrels produced per rig is increasing, the barrels per average producing well is decreasing (Figure 1).

Rig productivity is a potentially deceptive measurement because it does not consider cost and apparently it always increases. It gives a best of all possible worlds outcome that seems to defy the laws of physics. Drilling productivity gives the false impression that as the rig count approaches zero, production approaches infinity.

Barrels per rig is interesting but the cost to produce a barrel of oil is what matters.

Similarly, drilling efficiency measures the decrease in the number of days to drill a certain number of feet. This is also interesting but, unless we know how it affects the cost to produce a barrel of oil, it is not useful.

The data contained in 10-Q and 10-K SEC forms provides a continuing view of a company’s financial position during the year. This allows us to determine a company’s cost per barrel and its components that rig productivity and drilling efficiency do not provide.

First-half 2015 SEC filings for Pioneer, EOG* and Continental show that these companies are all losing money at an average realized crude oil price of $48 and range of $44-52 per barrel that includes hedges. I chose these companies to study because they have good positions in the best tight oil plays, and provide a weighted cross-section of Bakken, Eagle Ford and Permian production performance (Table 1).

---- Operating costs for Pioneer, EOG and Continental decreased by about 15%, 12% and 16%, respectively, in 2015 compared with 2014. This had nothing to do with rig productivity or drilling efficiency since those are capital costs; we are talking here about operating costs.

Decreases were because of reduced staffing costs, lower taxes because of lower oil prices and revenues, and generally lower costs of doing midstream business as service providers lowered their prices to remain competitive in a lower oil-price environment.

Next, I investigated how production rates changed in response to lower oil prices. Continental’s production increased 12% in 2015. Both Pioneer’s and EOG’s 2015 daily production rates, however, were flat compared with 2014 as these companies apparently exercised discipline in the face of lower prices (Table 3).

---- All three companies lost money on a unit basis for H1 2015. EOG lost the least at $9.74 per Boe (28% of its realized price). Pioneer lost $23.48 (75% if its realized price per Boe) and, Continental, $24.04 (69% of its realized price per Boe).

Any analyst or journalist who says that tight oil companies are doing fine at lower oil prices because of rig productivity, drilling efficiency or any other factor needs to look at the data. For less substantial and less well-positioned companies than the three in this study, the losses are probably far worse.

These observations are consistent with the trends in cash flow shown in Table 5.

---- All three companies had negative free cash flow in H1 2015. Pioneer out-spent cash flow by $781 million; EOG out-spent cash flow by $966 million; and, Continental out-spent cash flow by $1.1 billion.

Table 5 also reveals that EOG was cash-flow positive in 2014 before oil prices collapsed although Pioneer and Continental lost money even at higher oil prices. I wanted to compare EOG’s costs when the company was cash-flow positive to more recent costs when it was cash-flow negative (Table 6).

More

http://davidstockmanscontracorner.com/rig-productivity-versus-per-barrel-costs-in-the-shale-patch-calling-out-the-red-herrings/

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?

No update today.

The monthly Coppock Indicators finished August

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