Baltic Dry Index. 763 +15 Brent Crude 48.55
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Stated differently, China’s red capitalism is the new black swan.
David Stockman.
For more on American fox hunting, scroll down to today’s Cameron and Osborne Crooks Corner. Corbynism it isn’t, though Corbyn is no Trudeau.
We open today with John Bull going off Uncle Scam’s 1945 reservation. The old Emperor is increasingly seen as having no clothes, while the rising new Emperor is ordering up a dozen fine Saville Row new suites. Thatcher-Reagan is so last century! But last decade might not be the future but a one off illusion. A fiat currency trade war is about to sink all boats.
China's Xi Says U.K. Financial Ties Make Nations Interdependent
October 20, 2015 — 5:35 PM BST Updated on October 20, 2015 — 9:03 PM BST
President Xi Jinping cited China’s ties with the U.K. financial-services
sector as he told lawmakers in London that the two countries are becoming
“increasingly interdependent.”In a speech to both houses of Parliament on Tuesday, Xi singled out the U.K.’s place as the leading offshore yuan trading center outside Hong Kong and its pioneering issuance of yuan-denominated sovereign bonds, while noting that Britain was the first major western country to apply for membership of the Asian Infrastructure Investment Bank. Addressing an audience including Prime Minister David Cameron, Xi said that his four-day visit provides an opportunity to lift bilateral ties to a “new height.”
“It’s fair to say China and the U.K. are increasingly interdependent and becoming a community of shared interests,” Xi told lawmakers gathered in the Royal Gallery behind the upper House of Lords. “I’m confident that the people of China and the U.K., who are creative and eager to embrace change, can surely make more opportunities and take our relationship to a new level.”
Xi’s visit comes at a time when British steel plants are being closed and more than 5,000 workers face losing their jobs in the face of cheaper imports from China. Shortly before Xi’s address, business secretary Sajid Javid told the lower House of Commons that Cameron will raise “unfair trade” in his talks with the Chinese president.
Xi also addressed the rule of law in his speech amid concerns that British companies do not face a level playing field in China. Chinese regulators denied claims that investigators have unfairly targeted foreign businesses after GlaxoSmithKline Plc was fined a record sum for bribery last year.
“Our goal is to ensure all are equal before the law, to accelerate the development of a system of socialist law-based governance with distinct Chinese features and steadily promote the making of sound laws, strict law enforcement, judicial justice and the building of a law-abiding nation,” Xi said, according to a translation of his remarks. “He who abides by the law will make a country strong, while he who fails to do so will make a country weak.”
Xi’s visit is the latest sign that the Cameron government’s more accommodative stance toward China has ended a near two-year diplomatic freeze caused by the prime minister’s 2012 meeting with the Dalai Lama.
The U.K. is striving to be China’s “best partner in the West” and usher in a “golden era” between the countries, Chancellor of the Exchequer George Osborne said during a visit to China in September.
More
http://www.bloomberg.com/news/articles/2015-10-20/china-s-xi-says-u-k-financial-ties-make-nations-interdependent
Meanwhile bad news continues on as good news in the global casinos. I think we all know what comes next.
Asia Stocks Gain With U.S., U.K. Index Futures on Stimulus Bets
October 20, 2015 — 11:56 PM BST Updated on October 21, 2015 — 6:00 AM BST
- Wider Japan trade deficit underscores waning global demand
- Oil's drop sinks ringgit following EM currency selloff
“Whenever we get negative economic news, hopes for additional monetary easing moves the market,” Takashi Aoki, a fund manager at Mizuho Asset Management Co., which manages the equivalent of about $33 billion, said by phone. “We’re starting to see hard evidence for our fears about the global economy being weak.”
The Japanese data add to a string of reports that highlighted how
weakness in China’s economy is being transmitted to its trading partners. As
the end-of-October Bank of Japan meeting looms, about a third of the economists
surveyed by Bloomberg are predicting the stimulus program will be
expanded. Traders have been paring back bets for a Federal Reserve
interest-rate increase this year amid signs that the slowdown threatens the
U.S. recovery and corporate earnings. The European Central Bank meets on Thursday.
More
Back in the real world, life is different. The
bubble is ending.
U.S. oil output slide looms as shale firms hit productivity wall
Stagnating rig productivity shows U.S. shale oil producers are running
out of tricks to pump more with less in the face of crashing prices and points
to a slide in output that should help rebalance global markets.
Over the 16 months of the crude price rout, production from new wells
drilled by each rig has risen about 30 percent as companies refined their
techniques, idled slower rigs and shifted crews and high-speed rigs to
"sweet spots" with the most oil.
Such "high-grading" helped shale oil firms push U.S. output to
the loftiest levels in decades even as oil tumbled by half to less than $50 a
barrel and firms slashed rig fleets by 60 percent.
But recent government and private data show output per rig is now
flatlining as the industry reaches the limits of what existing tools,
technology and strategies can accomplish.
"We believe that the majority of the uplift from high-grading is
beginning to wane," said Ted Harper, fund manager and senior research
analyst at Frost Investment Advisors in Houston. "As a result, we expect
North American production volumes to post accelerating declines through
year-end."
Drillinginfo, a consultancy with proprietary data, told Reuters well
productivity has fallen or stabilized in the top three U.S. shale fields - the
Permian Basin and Eagle Ford of Texas and the Bakken of North Dakota – since
July or August.
The U.S. Energy Information Administration, whose benchmark drilling
productivity index is based in part on Drillinginfo data, forecasts next
month's new oil production per rig in U.S. shale fields to stay at October
levels, which it estimates at 465 barrels per day (bpd).
The big challenge of shale oil work is that well output drops off
quickly - often more than 70 percent in the first year alone. So producers need
to keep squeezing more oil out of new wells drilled by the currently deployed
rig fleet just to offset steep declines in what existing wells produce.
If that is no longer possible and firms remain reluctant to add rigs because of low crude prices and an uncertain outlook, overall production is set to sink.
In the Eagle Ford, production from so-called legacy wells fell by
145,485 bpd last month, a drop that was 23 times larger than the 6,293 bpd lost
in September of 2010, before the fracking boom brought thousands more wells
online.
"The boulder that is decline is much bigger in size and rolling
much faster than before," Davis said. "We’ve got very few rigs to
buttress the rate of decline."
Morehttp://www.reuters.com/article/2015/10/21/us-usa-oil-productivity-idUSKCN0SF0B220151021
And in Britain, the dream of instant wealth is dying. More and more Brits are all out of credit and worrying about jobs. Banksterism has reached the end of the road. As migrants flood into Germany depressing wages, Brits are economising on cash and dreams. Deflation stalks European wages.
Brits are refusing to buy lottery tickets for 'low' jackpots
Sales of draw-based sales at Camelot UK have fallen during the six months to the end of September, dented by waning interest in EuroMillions
A dearth of big money rollover jackpots so far this year has led to
another fall in EuroMillions sales at Camelot UK.
The Lotto operator said that first-half EuroMillions sales slid 2.4pc to
£717m, dragging overall draw-based sales at Camelot down by £40.6m to £2.2bn
for the six months to September 26. Relatively fewer rollovers in the European
lottery meant that ticket sales had fallen, said Andy Duncan, chief executive.
“We’ve only had three jackpots of over £50m in the last six months, in
the first six months of last year we had 13 in the same period,” he said.
EuroMillions sales dipped by 0.2pc in the year to the end of March, the
second straight annual fall.
Morehttp://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/leisure/11943687/Brits-are-refusing-to-buy-lottery-tickets-for-low-jackpots.html
“The boom can last only as long as the
credit expansion progresses at an ever-accelerated pace. The boom comes to an
end as soon as additional quantities of fiduciary media are no longer thrown
upon the loan market.”
Ludwig
von Mises.
At the Comex silver depositories
Tuesday final figures were: Registered 42.87 Moz, Eligible 120.27 Moz, Total
163.14 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, what happens
when China goes seriously off the tracks?
As ever, President Reagan’s man from the woodshed sums it up
brilliantly. Shame about GB’s Plan “C” about cozying up to Beijing. Below,
David Stockman mercilessly shoots Cameron and Osborne’s fox.
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.
Red Swan Descending
by David Stockman • October 20, 2015
The proverbial peddlers of Florida swampland can now move
over. They can’t hold a candle to the red suzerains of Beijing.
The latter had drawn a line in the sand at 7.0% GDP
growth. Conveniently enough, the “consensus” estimate of
so-called street economists was pegged at 6.8% for Q3, thereby
giving authorities one thin decimal point through which
to thread a “beat” at 6.9%.
By golly they did it!
Even then, China’s Ministry of Truth had to fiddle down the
GDP deflator to negative 0.5% (for the second time this year) in order to
hit the bulls eye. And that’s exactly the point.
No real world $10 trillion economy plagued with all of the turmoil evident
in China’s whipsawing trade data or its volatile real estate development
sector or its faltering rust belt and commodity-based industries can possibly
deliver absolutely stable GDP numbers to the exact decimal point quarter after
quarter.
In fact, the odds that these reports represent anything other than
goal-seeked propaganda are so overwhelmingly high that they perforce raise
another more important question. Why does Wall Street and its servile
financial press not issue a loud collective guffaw when they are released?
But no, the Wall Street Journal took it all very seriously, noting both
the “beat” and China’s claim that the “miss” wasn’t a miss at all:
----In truth, Wall Street has become so intellectually addled from its
addiction to central bank enabled gambling that it no longer has a clue
about what really matters. That’s why the next crash will come as an even
greater surprise than the Lehman meltdown, and will be far more brutal and
uncontainable, as well.
Yet the evidence that a China-led crash is on its way is hiding in
plain sight. And what is being blithely ignored is
not merely the blatant inconsistencies in its
economic numbers—–such as the fact that electricity consumption has grown
at only a 1.3% rate over the past year——or that its commerce with the
outside world has shrunk drastically, with imports down by 23% and exports off
by 3-6% in recent months.
Instead, the evidence that China is a slow-motion trainwreck lies
in the very consistency of its Beijing-cooked numbers. Apparently,
no one has told its credit-happy rulers that printing precise amounts
of new GDP quarter after quarter by issuing credit at double the rate
of nominal income growth will eventually result in the mother of all
deflationary collapses.
----The other number number in the Q3 release that has been drastically
misinterpreted is the reported 10.6% growth of fixed asset investment.
Needless to say, this was described as “disappointing” when it is actually a
screaming symptom of China’s terminally deformed economy. If it had
any hope of avoiding a crash landing, fixed investment in its fantastically
overbuilt public facilities and industrial capacity would be sharply
negative, not still growing in double digits.
Owing to the cardinal error embodied in Wall Street’s self-serving
rendition of Keynesian economics, however, China’s fatal dependence
on erecting economic white elephants and what amount to public pyramids in
the form of unused airports, train stations, highways and bridges, is
given hardly a passing nod. That’s because it is assumed that some way or
another China will make the transition to a services and consumption based
economy just like the good old shop-till-they-drop US of A.
Let’s see. When China finally stops its borrowing binge, these
putative shoppers will need to finance their purchases out of current incomes.
Yet is not the overwhelming share of household income in China currently earned
from the supply chain for fixed asset investment and construction and
from the export of cheap goods to already saturated and debt-besotted
DM markets?
Just consider the fantastical reality that China’s 2 billion ton
cement industry produced more in three years than did the US industry during
the entire 20th century. When they finally stop building roads, apartments and
factories, therefore, it is not just the cement kilns which will shutdown,
but a whole network of gravel haulers, chemical plants, cement truck fleets,
construction equipment suppliers, work site service vendors and much more
reaching deep into the interstices of China’s hothouse economy.
Likewise, when rebar and other construction steel demand collapses and
the rest of the world throws up barriers to China’s surging steel exports, as
it surely will and is already doing, the ricochet effects on China massively
overbuilt 1.1 billion ton steel industry will be far-reaching. The incomes of
coal barons and blast furnaces workers alike have already taken a pasting, and
the downward spiral is just getting started.
More,
much 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?
Today, just how fast the 21st
century is changing.
New material created from orange peel cleans up mercury pollution
Colin Jeffrey October 19, 2015
Since the beginning of the industrial age, mercury pollution has increased
steadily in our environment, particularly in rivers and oceans. As a result,
high-level predators in our waterways often contain very high levels of
mercury, and eating fish containing this neurotoxin can lead to serious health
issues. Now Australian scientists working at Flinders University have
discovered a simple and efficient way to remove mercury from the environment by
using a material made from recycled waste citrus peel.Attempts in the past at removing mercury from ore processing, such as the EPA's MCS system, often involve large machinery and complex processes that are well less than 100 percent efficient, and not really suited to marine environments. And, mercury-adsorption materials made from aluminum oxide hold some promise, an efficient, easy, cheap method to remove mercury levels to safe drinking levels with a few treatments has been a long-held goal.
The new substance from Flinders University, however, is capable of removing mercury from both soil and water, is made from renewable, recycled, organic waste, and provides an efficient and sustainable way for continuous mercury pollution removal.
The key ingredient in the new material is sulfur-limonene polysulphide, which is a polymer created from sulfur and limonene – a substance found in the oily skin of citrus fruits. With both of the major ingredients being leftover waste from the petroleum and citrus industries, respectively, there are many millions of tons of both discarded around the world on a yearly basis.
----"More than 70 million tonnes of sulphur is produced each year by the petroleum industry, so there are literally mountains of it lying, unused, around the globe, while more than 70 thousand tons of limonene is produced each year by the citrus industry (limonene is found mainly in orange peels)." said Doctor Chalker of Flinders University. "So not only is this new polymer good for solving the problem of mercury pollution, but it also has the added environmental bonus of putting this waste material to good use while converting them into a form that is much easier to store so that once the material is 'full' it can easily be removed and replaced."
Initially interested in simply producing a new polymer in this way, the
researchers were surprised to discover that the material they had created also
seemed to bind very well to heavy metals.
----Another surprising advantage to using
sulfur-limonene polysulphide to absorb mercury is that the material changes
color in response to its exposure to mercury. That is, it has a chromogenic
(color producing) effect, and so can also be used as a detector for mercury
pollution.
Currently exploring commercialization of this technology, the Flinders
University researchers hope to use this material to leach mercury from soil and
groundwater, and also study its use in water filters for potable water.
More
The monthly Coppock Indicators finished September
DJIA: +41 Down. NASDAQ:
+138 Down. SP500: +65 Down.
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