Baltic
Dry Index. 728 -08 Brent Crude 48.64
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
The only function of economic forecasting
is to make astrology look respectable.
J. K. Galbraith.
Perhaps it was a mistranslation. Perhaps it
was the strain of shuffling past millions of migrants each day, struggling in
to luxury in Deutsche Bank Hamburg. Perhaps doing God’s work simply got too much
for DB’s poor Boris Boehm, who manages 2.3 billion euros for Germany’s leading
bank, now busy studying how to comply with Sharia law. Who knows? But in the
newly forming German Khanistan state of Middle Europe, DB’s HQ has demanded the
peon money managers seek “prettier brides.” You couldn’t make this sort of
corporate PR disaster up. Below continental Europe one Lehman away from
collapse and disaster. But bad news being good, keep on buying those euros and
continental stocks. Draghi’s got you covered!
If all else fails, immortality can always
be assured by spectacular error.
J. K.
Galbraith.
More Pain, Slow Gain as Europe's New Bank CEOs Expect Grim Years
October 29, 2015 — 11:00 PM GMT
Europe’s biggest investment banks are telling investors that it will take
years for their overhauls to bear fruit.
John Cryan, Deutsche Bank AG’s co-chief executive officer since July, said
on Thursday the next two years will be tough as plans to shed workers and
businesses and revamp technology hurt results. He echoed remarks
by Tidjane Thiam, Credit Suisse Group AG’s new CEO, who laid out his
reorganization plan last week. Rising charges for misconduct and
restructuring forced
Barclays Plc to cut its
profitability target for 2016.
More than seven years after the financial crisis, Europe’s biggest
securities firms are still shaking up their businesses to cope with stricter
regulation and fines for misleading clients and manipulating markets. The three
banks have yet to dispel investor doubts about their growth prospects in
the face of increasing capital requirements and competition from U.S. rivals.
“European investment banks face a tougher time,” said Christian Sole, who
helps manage 90.3 billion euros ($99 billion) at Candriam Investors Group in
Brussels. “They’re doing the right thing in cutting costs and retrenching, but
two years is an eternity and shareholders will have to learn to be patient for
getting a return on their investments.”
Deutsche Bank shares posted the biggest loss since August on Thursday,
slumping 6.9 percent to 25.59 euros in Frankfurt. Barclays tumbled 6.3 percent
in London -- its largest drop in 16 months -- after posting third-quarter
earnings that missed analysts’ estimates. Credit Suisse slid 3.6 percent on
Oct. 21, the day Thiam announced his strategy.
Cryan plans to eliminate Deutsche Bank’s dividend for this year and next to
conserve capital and avoid a share offering. Thiam said last week he would
prioritize building up capital over near-term dividend increases, while tapping
investors for 6 billion Swiss francs ($6.1 billion) in a stock sale.
“We’re all on the hunt for dividends -- they’re the new interest,” said
Boris Boehm, who helps manage about 2.3 billion euros, including Deutsche Bank
shares, at Aramea Asset Management in Hamburg. “There are prettier brides out
there.”
More
In Uncle Scam’s probity challenged America, all setbacks are now
officially “temporary.” Lacking snow to blame for the third quarter’s economic
stumble, the Fedster’s spin is that this still qualifies as the US economy “expanding”
at a “moderate” pace. Magically Bloomberg intones, “economists
expect growth to pick up in the fourth quarter given strong domestic
fundamentals.”
Economics is extremely useful
as a form of employment for economists
J. K. Galbraith.
Inventories hurt U.S. third-quarter GDP, domestic
demand strong
Thu Oct 29,
2015 9:16am EDT
U.S. economic growth braked sharply in the third quarter as businesses
cut back on restocking warehouses to work off an inventory glut, but solid
domestic demand could encourage the Federal Reserve to raise interest rates in
December.
Gross domestic product increased at a 1.5 percent annual rate after
expanding at a 3.9 percent clip in the second quarter, the Commerce Department
said on Thursday.
The inventory drag, however, is likely to be temporary and economists
expect growth to pick up in the fourth quarter given strong domestic
fundamentals.
The Fed on Wednesday described the economy as expanding at a
"moderate" pace and put a December rate hike on the table with a
direct reference to its next policy meeting. The U.S. central bank has kept
benchmark overnight interest rates near zero since December 2008.
"Underlying growth is still strong, or at least, strong enough to
handle interest rates not being at emergency low levels anymore," said
Jennifer Lee, a senior economist at BMO Capital Markets in Toronto. Prices for
U.S. Treasury debt fell on the data, while the dollar trimmed losses against a
basket of currencies.
The economy has struggled to sustain a faster pace of growth since the
end of the 2007-2009 recession, with average yearly growth failing to break
above 2.5 percent. Economists had forecast GDP rising at a 1.6 percent rate in
the third quarter.
More
Next, more on real life in the
central bankster created, Great Nixonian Error of fiat money commodities boom
and bust. Not to worry though, no central banksters or City slickers and Great
Vampire Squids were hurt in making this epic commodities super-cycle round
trip. Shame about the Africans though. Still look on the bright side, central
banksters have triggered the greatest boom ever in our global gambling dens.
Still, it might be a good idea to start removing the lampposts from London and
New York.
Under capitalism, man exploits
man. Under communism, it's just the opposite.
J. K. Galbraith.
Glencore's Massive Debts Hurt Most Those Who Have the Least
More than 4,000 will be laid off for mine
modernization in Zambia, and workers there say they will struggle to find new
work.
October 30, 2015 — 12:00 AM GMT
For more than a decade, copper mines in Africa proved a lucrative bet
for Glencore Plc, accounting for almost a third of its production of the
metal in the first half of the year. Executives including the company’s
billionaire chief, Ivan Glasenberg, were happy to highlight the
economic benefits they brought to places like Kitwe, Zambia, where
most of the local economy is dependent on the company’s
Mopani
mining complex.
Now, with $30 billion in debt, an 18 percent drop in copper prices and
plunging
shares, Glencore is targeting Kitwe and other Africa mining operations
to help save itself.
All of Glencore’s copper production in Zambia, and most of what it has
in the Democratic Republic of Congo, is closing for 18 months. The mines
will be refurbished, and the global copper market will lose about 400,000
tons of metal over the period.
That should help prices recover and improve the profitability of the
African copper mines when they reopen, Glencore says. At the height of the
commodity boom in 2011, when copper prices surged to a record, Mopani
earned $207 million on sales of $1.15 billion, a 204 percent increase from
2010.
The closure is a bitter blow for Kitwe, where about 4,000 direct jobs
could be lost, more among contract workers. Standing outside the gate of
one of Glencore’s towering elevators into the mineshaft, contractor Allan
Mukosha says the Swiss company’s decision will hit “like a funeral” in
Zambia’s second-largest city.
“The impact will be enormous,” said
the 50-year-old, one of 20,000 people in Kitwe whose jobs depend on
Glencore’s
Mopani operations. “A lot of people will go to the streets. Poverty
levels will be high. The crime level will also increase.”
Unionized miners will get packages of as much as two months’ pay for
every year worked and some may be rehired for the upgraded mine. Even so,
it may be too late. National Union of Miners and Allied Workers President
James Chansa says the severance will get chewed up repaying loans workers
took during better times.
It’s devastating for the entire country, already reeling under the
copper price decline and a power crisis, said Finance Minister Alexander
Chikwanda. Mine-tax revenue in 2016 will probably be “zero or very
minimal,” he said. Copper production accounts for 70 percent of Zambia’s
exports, one reason why the currency is the world’s worst-performing this
year. About 60 percent of Zambia’s 15.7 million people live on
less than $1.25 a day, according to the World Bank.
----
The company will continue its
participation in health, education, enterprise development, water and
sanitation programs in the area. Some employees will attend technical
school during the suspension period and those laid off will have priority
for new jobs, Glencore said in a statement.
Glasenberg, Glencore’s chief executive officer, said that, in the
face of the crisis, Zambia’s government had been “very accommodating” and
that has encouraged the company to invest there for the future.
“This is a country I can deal with because when times were tough
they let us shed our workforce, they let us cut production,” Glasenberg
said at a conference in London on Oct. 5. Zambia is a country
about which investors can say “‘I don’t mind putting more money in there.”’
The
commodity
crash has contributed to a 60 percent drop in Glencore’s
shares this year. And it’s wiped out hundreds of millions of dollars
in paper wealth for the company’s top insiders.
More
We end for the week with a
glimpse of the future in the Great Nixonian Error of fiat money. The return of the cashless economy of the Dark
Age and serfdom to central banksters and banksters in general.
People in
Sweden are hiding cash in their microwaves because of a fascinating — and
terrifying — economic experiment
Thursday, Oct. 29, 2015
Sweden is shaping up to be the first country to plunge its citizens into
a fascinating — and terrifying — economic experiment: negative interest rates
in a cashless society.
The
Swedish central
bank held its benchmark interest rate at -0.35%
today, the level it has been at since July.
Although retail banks have yet to pass on that negative to rate to Swedish
consumers, the longer it’s held there the more financial pressure there is for
banks to pass the costs onto their customers. That’s a problem
because
Sweden
is the closest country on the planet to becoming an all-electronic cashless
society.
Remember, Sweden is the place where, if you use too much cash,
banks
call the police because they think you might be a terrorist or a criminal.
Swedish banks have started removing cash ATM machines from rural areas,
annoying
old people and farmers. Credit Suisse says the rule of thumb in
Scandinavia is: “
If
you have to pay in cash, something is wrong.”
Here’s
a
chart from Quartz demonstrating how serious the Swedes are about getting
rid of cash:
----If banks charge customers negative rates of interest in a cashless society,
those customers are not able to withdraw their money as cash to shield it,
under their putative mattresses. Consumers’ only choice in such a scenario is
to spend it or let the bank take it. (The theory is that by forcing people to
spend cash rather than save it, you can spur economic growth.)
Rather than going further into negative territory — a move that carries
political risks the more negative it becomes — the Riksbank chose instead to do
another
round of quantitative easing (a forced bond buying program that flushes
more central bank cash into the economy).
But the pressure for negative interest rates to drive cash out of bank
deposits and into the economy is building.
Switzerland,
for instance, has negative central policy rates that cost its banks $1 billion
a year.
Those costs haven’t yet been passed down to consumers. But how much
longer will banks eat that before adding fees and charges to Swiss accounts to
defray the cost?
We reported at the weekend how
central
bankers and investment bank analysts are increasingly discussing when this
might happen. And yesterday,
Italy
sold a two-year bond at an interest rate of -0.023%, which means investors
have to
pay to lend Italy money rather than receive interest on their
loans. (Why would you buy such a bond? Well, if you believe that you’ll get
even worse terms in the future from other creditors — hello, Sweden! — then
suddenly -0.023% starts to look pretty good.)
So two trends are converging on Sweden at the same time:
- Sweden is using less and less cash.
- Sweden is a negative interest rate
environment.
And that means many Swedes have no way to “hide” their money.
So Sweden
may become the first country where its citizens may have to accept negative
interest rates (probably in the form of higher bank charges or fees) or be
forced to spend their money in order to “save” it from those rates.
Money differs from an
automobile or mistress in being equally important to those who have it and those
who do not.
J. K. Galbraith.
At the Comex silver depositories
Wednesday final figures were: Registered 43.15 Moz, Eligible 118.94 Moz, Total
162.09 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, China v Japan fight over electric vehicles.
Batteries v hydrogen powered fuel-cells. Any room in there for flywheels?
Auto power play: Japan's hydrogen car vs China's
battery drive
Wed Oct 28,
2015 2:39am EDT
Asia's two autos powerhouses, Japan and China, are jostling for supremacy in
how future electric cars should generate their power – from batteries or
hydrogen-powered fuel-cells.
In a potentially high-stakes clash reminiscent of Sony versus Panasonic in the
Beta-VHS video war in the 1980s, the winner could enjoy years of domination if
their technology is adopted as a global standard by other manufacturers.
This time, though, there should be a place in the autos market for both
electric battery and hydrogen fuel-cell cars. The key question is which will
power more mainstream cars – the market dominated today by the likes of Toyota,
General Motors and Volkswagen (
VOWG_p.DE).
"We're reaching a crossroads," says James Chao, Shanghai-based
Asia-Pacific managing director for industry consultant IHS Automotive.
"It's difficult to exaggerate the significance of the choice between
batteries and hydrogen.
"Billions of dollars will be invested in one or the other and may
determine which companies will lead the industry through the end of this
century."
China, a major oil importer and blighted by air pollution, is pushing for
all-electric (EV) cars, offering incentives to buyers, forcing global
automakers to share their technology, and opening its market to tech firms and
others to produce electric vehicles.
For a decade, Beijing has pushed for the EV to become a mass-market car,
hoping a low entry barrier will allow its relative late comers to close a
competitive gap with global rivals who have a century's head-start in
traditional combustion engines.
"(China President) Xi Jinping explained it very well, saying that
developing new energy vehicles is the Chinese auto industry's only road to grow
from being big to being strong," Xu Heyi, chairman of Beijing Automotive
Group and a high-ranking Communist Party official, told reporters recently.
Japan, though, sees the future differently and is investing heavily in
fuel-cell technology and infrastructure as part of a national policy to foster
what it calls a 'hydrogen society', where the zero-emission fuel would power
homes and vehicles.
Toyota Motor especially is keen to maintain the alternative propulsion lead
it established a decade and a half ago with the full hybrid electric Prius.
"It's not that we're not doing anything about the EV. Technically
speaking, EV is a relatively easier technology," said Koei Saga, Toyota's
senior managing officer in charge of vehicle powertrain technology.
"But
it needs to evolve. If you're looking for the ultimate solution, the EV
probably isn't it."
More
Wealth is not without its
advantages and the case to the contrary, although it has often been made, has
never proved widely persuasive.
J. K. Galbraith.
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 or DC energy mankind’s future from the
21st century onwards? DC? A quantum computer next?
Ice cores confirm colossal solar storms
Evidence that Earth was hit by two solar storms – 10 times larger than those
observed recently – 1,000 years ago. If they occurred today, they’d have
devastating effects on power supplies, satellites and communications.
October 26, 2014 – scientists in Sweden published a study in the journal
Nature
Communications suggesting that solar storms – streams of charged particles
from the sun – could be much more powerful than previously assumed. Researchers
at Lund University say they’ve now confirmed that Earth was hit by two extreme
solar storms more than 1,000 years ago. These storms were at least 10 times
larger than those observed in recent decades. The evidence for these storms is
trapped in ice in Greenland and Antarctica.
Many skywatchers at high latitudes look forward to solar storms, because the
particles they release may interact with Earth’s magnetic field, resulting in
spectacular displays of auroras, or northern and southern lights. However,
while solar storms aren’t harmful to us on Earth’s surface – because our
atmosphere protects us – they do pose a risk to our earthly technologies.
In extreme cases, solar storms have caused major power outages, such as the
one in October 2003 in Sweden and in March 1989 in Canada. They could also lead
to breakdowns of satellites and communication systems. Raimund Muscheler of
Lund University, speaking of the two enormous solar storms discovered by his
research group, said in an
October
26 statement:
If such enormous solar storms would hit Earth today, they could have
devastating effects on our power supply, satellites and communication systems.
Follow the links below to learn more.
What
did this new study say?
What
are solar storms, and how do they affect us?
What
would happen if such a powerful solar storm took place today?
Is
such a powerful solar storm likely to occur again in our lifetimes?
774–775 carbon-14
spike
Have a great weekend everyone. More lunacy next week. Check with the
weekend website for the weekend update.
More die in the United States
of too much food than of too little.
J. K. Galbraith.
The monthly Coppock Indicators finished September
DJIA: +41 Down. NASDAQ:
+138 Down. SP500: +65 Down.
