Friday 25 September 2015

The Long Weekend.



Baltic Dry Index. 922 +05       Brent Crude 48.38

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

We often get in quicker by the back door than by the front.

VW software department, with apologies to Napoleon.

While Volkswagen does its best to kill off the global market for diesel powered cars, China is about to flood the market with cheap diesel exports. Another surge of commodity deflation is coming from China. Like Napoleon returning from Moscow, if it wasn’t for bad news, commodities and German autos wouldn’t have any news at all. More VW revelations will come out over the weekend. In Spain, will the Catalans show more independence spirit than the Scotch?  A good weekend to be safely out of risk. It will be a long, long, weekend in Germany and Spain.

China Is Sitting on an Ocean of Diesel Fuel

Add diesel to the commodities flooding global markets from China.
The nation exported a record volume of the fuel last month after already shipping unprecedented amounts of steel and aluminum overseas. The weakest economic growth since 1990 is sapping domestic demand for commodities, while refineries, mills and smelters grapple with excess capacity after years of expansion.
“A lot of it has to do with slowing demand at a time when companies had plans for much a better demand environment, so capacities had been increased,” said Ivan Szpakowski, a commodities strategist at Citigroup Inc. in Hong Kong. “As demand slows, that’s led to an overcapacity in the domestic market and producers have sought to export the surplus.”
Exports of Chinese raw materials are exacerbating a global glut that drove prices to the lowest since the 2008 financial crisis and prompted steel and aluminum producers around the world to protest against the deluge. While diesel exports are principally a risk to Asian refiners, the additional shipments threaten to worsen a glut that already extends from Singapore to Europe and the U.S.
Refining profits, or cracks, from making diesel in the Asian oil trading hub of Singapore have shrunk about 30 percent from a year ago as exports from China, India and the Middle East create an oversupply, according to Ehsan Ul-Haq, an analyst at KBC Advanced Technologies in London.
"The world is becoming an ocean of diesel," said Ul-Haq. "Demand in China is not as high as it was previously expected. Chinese refiners are becoming more export oriented."
China’s August shipments of the fuel, also known as gasoil, surged 77 percent from a year earlier to a record 722,516 metric tons, or about 175,000 barrels a day, according to data released this week by the General Administration of Customs. They may rise to about 250,000 barrels a day later this year, according to ICIS China and JBC Energy GmbH, industry consultants.
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VW emissions crisis spreads to Europe as EU orders spot checks on cars

Crisis at Volkswagen crosses the Atlantic as German transport minister says company used 'defeat devices' in Europe and Britain orders new checks on pollution

The crisis engulfing Volkswagen intensified on Thursday night with an EU-wide call for fresh tests on car emissions and the German government claiming the auto giant cheated tests in Europe as well as the US.
BMW was also drawn into the scandal, with reports in the German motoring press that its X3 off-roader pumped out 11 times more pollution than allowed. Despite denials from BMW, nervous investors dumped the stock, sending the shares down 5pc.

In Britain, the Department of Transport said it would begin re-testing cars from a variety of manufacturers to ensure the use of so-called "defeat devices" is "not industry wide".

British motorists could also launch claims against VW, with law firm Leigh Day saying it was considering action for consumers over breach of contract and compensation for increased spending on fuel, lower resale values and any increase in road tax because of higher pollution levels.

Major investors are also reported to be considering claims against VW, and are examining whether the deceit over pollution emissions gives them grounds for action after they saw the value of their holdings plummet.
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Germany's DAX Falls to Lowest This Year as Emission Woes Spread

September 24, 2015 — 7:16 AM BST Updated on September 24, 2015 — 6:29 PM BST
The fallout from Volkswagen AG’s emissions-cheating scandal spurred a selloff in shares that dragged Germany’s DAX Index to its lowest level of the year.

BMW AG dropped 5.2 percent as Autobild reported that diesel emissions from an X3 model exceeded European Union limits by as much as 11 times in a real-world road test. That helped push a regional gauge of automakers to its lowest level since November. 

The DAX retreated 1.9 percent today, taking its losses since Volkswagen admitted the deception to 4.9 percent. The Stoxx Europe 600 Index fell 2.1 percent and closed at its lowest level since January. 

“I think we’re going to see the automakers weighing on the market much more in the coming weeks,” said Barthelemy Debray, a fund manager at Old Mutual Global Investors in London. “We’ve heard nothing from auto suppliers and from auto manufacturers, I think they are in crisis mode. I think this is just the beginning.”
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In other news, Japan slows, Goldman has doubts about Glencore and is pessimistic on copper.

Japan effectively downgrades view of economy

Published: Sept 25, 2015 12:53 a.m. ET
TOKYO--The Japanese government said some slowness can be seen in its economy, an effective downgrade of its assessment and a blow to Prime Minister Shinzo Abe's efforts to put the country back on a strong recovery track.

In its monthly economic report for September, published Friday, the government recognized some areas of weakness such as exports while saying the economy is recovering moderately. The overall assessment was slightly more pessimistic than a month ago, when the government said the pace of economic improvement was uneven.

"Even as corporate profits improve or even as employment conditions improve, consumption remains largely flat," a government official said at a press briefing. "There is some slowness."

He said some price increases in daily necessaries may be encouraging consumers to save more than spend.
Data showed earlier in September the economy shrank in the April-June quarter from the prior three-month period, the first contraction in three quarters.
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Glencore Drops to Record Low as Goldman Flags Credit Concern

September 24, 2015 — 12:20 PM BST Updated on September 24, 2015 — 5:09 PM BST
Glencore Plc fell to a record low as Goldman Sachs Group Inc. said the company’s recent steps to reduce debt and bolster its balance sheet are inadequate.

"Investors are not yet convinced that Glencore has gone far enough to totally allay fears that the industrial assets can service the new lower debt level," Goldman Sachs analysts including Eugene King, said in a report Thursday. "Recent underperformance suggests that the measures exercised are insufficient and more is needed."

Glencore dropped for the fifth time in six days. The shares fell 9.6 percent to close at 98.61 pence in London, the lowest since the company’s $10 billion initial public offering in 2011.

Shares of the miner and commodity trader run by billionaire Ivan Glasenberg have plunged 67 percent this year as sliding commodity prices reduced earnings and forced the company to scrap its dividend and sell new stock. Glencore announced a $10 billion debt-reduction program earlier this month to strengthen its balance sheet as China’s economic slowdown deepens.

Goldman Sachs lowered its share-price target on Glencore to 130 pence from 170 pence. The rating remains "neutral" and the bank expects continued volatility.

Should commodity prices fall another 5 percent, the metrics needed to maintain the company’s credit rating would be out of the required range, Goldman Sachs estimated. Goldman Sachs also lowered its profit estimates for Glencore, citing lower thermal and metallurgical coal forecasts. Earnings will be 9 cents a share in 2016, the bank said, down from an earlier 20-cent forecast.

In a separate report, the bank said the bear market in copper will persist for years. It reiterated a call for prices to fall to $4,800 a metric ton by the end of the year. The metal was little changed at $5,054 on the London Metal Exchange on Thursday.

We end with a critical vote taking place in Spain this weekend. Catalonia’s separatists have hijacked the vote into an independence referendum.

Barcelona Battle With Separatists Raises Costs for Companies

September 24, 2015 — 12:01 AM BST Updated on September 24, 2015 — 3:08 PM BST
Catalonia’s threat to break from Spain is taking its toll on some of Barcelona’s biggest companies by driving up their financing costs.

Bonds maturing in 2022 sold by conglomerate Criteria CaixaHolding SA yield 123 basis points more than comparable Spanish government securities, up from 17 basis points in June. Subordinated bonds sold by Banco Sabadell SA due in 2020 now yield 3.31 percent compared with less than 2.5 percent in May.

Catalan President Artur Mas is seeking a mandate to make Spain’s biggest regional economy a separate country at a regional election on Sept. 27. CaixaBank SA, which runs Spain’s largest banking network from Barcelona, signed a Sept. 18 statement by lenders saying they may pull business from an independent Catalonia and Spanish business lobby CEOE has warned of “grave consequences” for companies if the region secedes.

“As elections approach and polls keep giving pro-independent parties a majority, conservative investors prefer to sell some bonds amid uncertainty,” said Xavier Cebrian, a fund manager at Barcelona-based asset manager GCV Gaesco Gestion. “Dialogue among politicians will continue and that is what most investors are counting on.”

Mas is pressing ahead with his challenge to the status quo while business leaders, regulators and politicians warn about the economic consequences of his plan. His situation carries echoes of both the opposition in the U.K. to Scottish independence in 2014 and the European establishment’s lectures to Greece’s Alexis Tsipras this year.

Scots in the end voted “no” in their referendum, while Tsipras won a second term as prime minister last weekend even after caving in to the euro area’s demands for more austerity measures.

Bank of Spain Governor Luis Maria Linde used a speech in Madrid Monday to warn that an independent Catalonia would be out of the euro region and its banks cut off from financing from the European Central Bank and drew parallels with the financial hardship in Argentina in 2001 and Greece this year.

Polls show support for independence continues to increase.
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"When it becomes serious, you have to lie"

Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.

At the Comex silver depositories Thursday final figures were: Registered 45.71 Moz, Eligible 120.91 Moz, Total 166.62 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Below, never let a good crisis go to waste. Churchill’s saying, plagiarised by Rahm Emmanuel, gets at thorough work out from Elon Musk out talking up his book. “Diesel bad, petrol worse, buy electric of course, how many do you need?”
The smell of profit is clean and sweet, whatever the source.
VW, with apologies to Juvenal.

Musk Says While Diesel-Cheating Is Bad, CO2 Emissions Are Worse

September 24, 2015 — 12:36 PM BST
Tesla Motors Inc. Chief Executive Officer Elon Musk said revelations that Volkswagen AG cheated on diesel emission tests is “obviously bad,” but that the issue the world should really be concerned about is carbon dioxide emissions.
“It’s very important that we take action today to recognize that we are making a very significant change to the chemical constituency of the atmosphere and the oceans,” Musk said Thursday in Berlin at a seminar organized by the Federal Ministry for Economic Affairs and Energy. “It’s very important that we do something.”
The scandal at VW is putting diesel emissions across the industry under scrutiny. The company has set aside 6.5 billion euros ($7.3 billion) in an initial tally of the potential cost of its deception of regulators and customers about emissions of diesel engines installed in 11 million cars worldwide -- more vehicles than it sells in a year.
Musk said that whereas Germany is “really great” on sustainable power generation, the country isn’t much so on sustainable power consumption.
“Transport is still very much petrol and diesel,” Musk said. “So hopefully that’s something that will change.”
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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?

Chinese firm to build solar power plant in Russia

Published time: 24 Sep, 2015 10:37
Chinese power company Amur Sirius is to start construction of a solar power station in Russia’s Samara region soon says the region’s head Nikolay Merkushkin.
The company may become the largest investor in the Russian solar power industry. The project is expected to cost 8 billion rubles ($110 million), and construction will be undertaken by the Chinese company’s subsidiary Solar Systems.
Our Chinese partners are ready to invest in the Samara region. Thus, the company Amur Sirius plans to build one of Russia's first solar power stations in Novokuybyshevsk... Solar Systems is going to start working on the preparation of land for the construction," Merkushkin said.
He says China is among the top five trading partners with the region, with turnover of almost $293 million in the first six months of the year.
Last year Solar Systems won a tender to build solar plants with 175 megawatt capacity in three Russian regions. The company also wants to take part in other Russian tenders, and plans to build a solar panel factory in Tatarstan.

Another weekend, and time to head down to the car showrooms to look at the acres of unsold diesels.  Who is going to buy a diesel now, knowing full well it will have almost no resale value, once the EU orders a U-turn on nasty unclean diesel.  Volkswagen may or may not survive in its present form.

My guess is that they will spin off some of the more prestigious brands, to avoid all going down if this criminal corporate venture sinks.  Soon some statistician or actuary will come up with estimates of how many premature deaths in America, and Europe, came from all the extra unnecessary pollution.  The figure for Europe, where diesel powered cars are almost half the market, will be staggering.  Have a great weekend everyone.

There’s nothing to winning, really. That is, if you happen to be blessed with a keen eye, an agile mind, and no scruples whatsoever.

Volkswagen, with apologies to Alfred Hitchcock.

The monthly Coppock Indicators finished August

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

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