Baltic Dry Index. 841 -28 Brent Crude 51.43
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
I may be a 1960s – 1980s commodities dinosaur from a bye gone age, but I
can recognise arriving trouble, that has the too big to fail or jail set
covering their derrieres. Lately, it’s all been about banksters and malinvested
mining and commodities companies scrambling for fig leaves. Despite their brave
words, words are cheap, all seem to see
trouble coming with a capital “T”. Arguably the US economy has now joined in
the increasing global slowdown. No amount of stock buy-back programs is going
to levitate stocks for long in our new unfolding Great Recession. From China to
the EUSSR the authorities seem to have lost control. Germany is reeling from
the self inflicted disasters of unlimited migrants, Dirty Volkswagens, and
idiotic American sanctions on Russia from their botched coup in Kiev. In
America, the babbling, dithering Fedster’s lose credibility with each passing
month. But in the game changer, in the Middle East, Russia seems to have taken
control.
Stay long fully paid up gold and silver. To this old dinosaur we seem to
be back at a 1968-1971 crisis era. Uncle Scam has just had his bluff called by
China and Russia. Russian cruise missiles just reigned down all over Syria,
mostly on CIA supported terrorist groups. The Project for the North American
Century is dead. American led NATO over reached itself. Tomorrow, is not going
to be like today which was like yesterday. China in the South China Sea, and
Russia in Syria have signalled enough. Tomorrow, say both, will be more multi
polar. Will the west roll its tanks into Russia? Defend Tokyo if China takes
back the Diaoyu Islands in accordance with the Cairo Agreement reaffirmed at
Potsdam, but trashed by Nixon? Trouble is coming with a Capital “T”.
Deutsche Bank Sees $7 Billion Quarterly Loss on Writedowns
October 7, 2015 — 9:14 PM BST Updated on October 7, 2015 — 9:41 PM BST
Deutsche Bank AG expects to report a surprise third-quarter loss of 6.2
billion euros ($7 billion) and may eliminate its dividend for the year after
writing down the value of its two biggest divisions and boosting its reserve
for legal costs.
The estimates, announced in a statement Wednesday, are part of a
strategy that co-Chief Executive Officer John Cryan will present Oct. 29 as he
looks to shore up capital and boost profitability at Europe’s biggest
investment bank. Deutsche Bank’s American depositary receipts tumbled 6.4
percent after the disclosure to $26.96 at 4:22 p.m. in extended trading in New
York.
The firm said it’s taking a 5.8 billion-euro writedown of goodwill and
intangible assets as higher capital requirements reduce the value of its
investment bank and it adjusts the estimate of what it will receive in the
disposal of its Postbank unit. The Frankfurt-based lender also is adding about
1.2 billion euros to its litigation reserves.
“As part of the planning for the implementation of Strategy 2020, the
management board will recommend a reduction or possible elimination of the
Deutsche Bank common share dividend for the fiscal year of 2015,” the company
said.
Cryan is cleaning up the firm’s balance sheet in his first full quarter
at the helm. Cryan, who shares the CEO post with Juergen Fitschen, inherited a
strategy to boost returns by lowering expenses about 15 percent by 2020 and
shrinking assets at the investment bank as much as 17 percent through 2018.
Cryan is seeking to avoid tapping shareholders for funds while focusing
on reorganizing the bank to meet growing demands for buffers from regulators.
In July he said “raising additional capital would not solve our core problem of
reversing our low financial returns and our poor organic capital generation.”
Deutsche Bank had turned to Postbank to diversify its funding mix by
boosting consumer deposits in the midst of the global financial crisis.
German Exports Slump Most Since 2009 Recession in Sign of Risks
October 8, 2015 — 7:00 AM BST
German exports slumped the most since the height of the 2009 recession
in a sign that Europe’s largest economy is vulnerable to risks from weakening
global trade.
Foreign sales declined 5.2 percent in August from the previous month,
the Federal Statistics Office in Wiesbaden said on Thursday. That’s the
steepest since January 2009. Economists predicted a drop of 0.9 percent.
Imports fell 3.1 percent. The trade surplus shrank to 15.3 billion euros ($17.2
billion) from 25 billion euros in July, according to the report.
Germany is grappling with a slowdown in China and other emerging
markets, which have been key destinations for its exports. With factory orders
from countries outside the 19-nation euro region down more than 13 percent in
July and August combined, the focus is shifting to strengthening domestic
spending fueled by pent-up investment demand and consumption.
The decline is the latest sign that prospects for the economy are
deteriorating. Germany’s leading economic institutes are set to lower their
growth forecast for 2015 to about 1.8 percent from a previous estimate of 2.1
percent, Reuters reported on Wednesday.
More
IMF Warns of Growing Emerging-Market Risks as Fed Nears Liftoff
October 7, 2015 — 3:00 PM BST
The IMF warned officials to protect their financial systems from possible
instability as the U.S. Federal Reserve prepares to raise interest rates,
saying shocks or policy missteps risk derailing the global economy and
triggering equity market sell-offs.High debt levels at banks and other companies have left developing economies susceptible to financial stress and capital outflows, just as the Fed prepares to raise interest rates for the first time since 2006, the International Monetary Fund said Wednesday in its Global Financial Stability Report.
"Emerging markets face substantial challenges in adjusting to the new global market realities from a position of higher vulnerability," the fund said, describing the preconditions for a Fed rate rise as “nearly in place.”
China, in particular, faces a "delicate" task in shifting to more consumption-driven growth without exposing the weaknesses of highly indebted companies and banks saddled with rising non-performing loans. “Recent market developments underscore the complexity of these challenges, as well as potentially stronger spillovers from China,” the fund said in the periodic report.
Meanwhile, problems lingering from the financial crisis still pose risks to advanced nations, including elevated public and private debt, and “remaining gaps in the euro area financial architecture.” Changes to the structure of the world’s bond markets, including a reluctance by traditional dealers to serve as market makers, may leave investors starved for liquidity when interest rates rise, according to the Washington-based fund.
Failure by policy makers to address this “triad” of challenges would reduce global output by 2.4 percent by 2017, as tightening credit conditions undermine confidence among businesses and households, the IMF estimated.
In an adverse scenario that the fund examines to study potential risks, long-term government bond yields would increase rapidly, while stock values in the U.S., U.K., euro area and Japan would slide about 20 percent, the IMF said. Energy prices would drop 22.7 percent, while the prices of non-energy commodities would slump 11.8 percent under the scenario, which the IMF called plausible but ”not extreme.”
More
October 7, 2015 6:51 pm
Russia targets Syrian rebels with cruise missiles
Russia dramatically escalated its military campaign against Syrian rebel groups on Wednesday, launching long-rang cruise missile strikes from ships in the Caspian Sea to support a land offensive by the regime of Bashar al-Assad and allied militias.
In the single heaviest day of bombing since Moscow’s
air campaign began last week, Russian aircraft also struck anti-Assad
forces as part of the first fully co-ordinated military operation with Damascus
and Tehran against the Syrian rebellion.
Even as Russia upped its military efforts,
however, President Vladimir Putin also signalled willingness to restart
diplomatic negotiations over Syria’s future — albeit on his terms.
“We understand that such conflicts must end with a political solution,” Mr Putin said on Wednesday, adding that he had discussed the idea with French president François Hollande of a negotiation between Mr Assad and moderate rebel groups to create a united front against the Islamist group Isis and al-Qaeda affiliate Jabhat al-Nusra in the region.
Russia’s use of 26 cruise missiles — the first time it has deployed such weapons in wartime — is likely to rattle Nato and allies.
The announcement of their deployment, which follows two incursions into
Turkish airspace by Russian jets this week, comes on the eve of Nato’s
quarterly meeting of defence ministers in Brussels on Thursday.
The use of the high-tech munitions marks a significant shift in Russian military posture, reflecting the Kremlin’s ability to project power far beyond its domestic sphere of influence.
Russia’s defence ministry on Wednesday released a slickly produced video on YouTube, with detailed graphics, showcased new weaponry — almost certainly 3M-14 “Turquoise” missiles, launched from Russian corvettes. The video showed the missiles travelled over Iran and Iraq to reach their targets.
“It has been a long-term ambition by Russia to develop this long-range . . . capability and this is first time they have used this system in anger,” said Doug Barrie, analyst at the International Institute for Strategic Studies.
Mr Putin said it was “too early” to talk about the results
of Russia’s intervention in Syria, which began last week. The
rapid losses of territory over the past year by the Syrian government, which
has close ties to Moscow, are believed to have prompted Mr Putin’s decision to
intervene.
More
At the Comex silver depositories
Wednesday final figures were: Registered 43.52 Moz, Eligible 119.54 Moz, Total
163.06 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, more on commodities risk. Though the article focuses
specifically on wounded Glencore, banks are on a similar hook at all of the
major mining and commodity houses. If the malinvestment bubble keeps deflating,
QE4 and deposit confiscation, (theft) are a given. Some giants are headed for a
mighty fall.
Bank of America says banks may have $100 billion in exposure to Glencore
Published: Oct 7, 2015 3:53 p.m. ET
Bank of America sees U.S. banks saddled with $100 billion in exposure to troubled mining giant Glencore
Embattled commodities giant Glencore PLC could prove a $100 billion
elephant in the room for some of the biggest U.S. banks as they report
quarterly results and undergo tests of their financial health in the coming
months.
The hefty sum comes from a Wednesday research note from Bank of America
Merrill Lynch that assesses the exposure of banks to Glencore.
Debt from the mining-and-commodities trading firm could deliver a jolt
to the financial sector, if the giant miner can’t keep up with payments on its
bank loans.
The investment firm doesn’t go into specifics about the banks that could
be exposed to Glencore, but says a number of U.S. and European financial
institutions provide credit to the miner and other commodity-focused firms.
Bank of America points out that financial regulators performing stress test on
banks’ abilities to withstand market shocks could be on the lookout for
exposures to Glencore and other troubled miners.
The Bank of America note comes a day after Glencore GLEN, +5.22% disclosed information about its financial health in an effort to assuage fears that the company is on the verge of being overwhelmed by its debts. Here’s an excerpt from the note below:
|
We estimate the financial system’s exposure to Glencore at over US$100bn, and believe a significant majority is unsecured. The group’s strong reputation meant that the buildup of these exposures went largely without comment. However, the recent widening in GLEN debt spreads indicates the exposure is now coming into investor focus. |
B. of A. notes that its exposure to Glencore may not rock any single institution but predicts that lenders might tighten their purse strings to Glencore and other miners.
|
To us, it seems that the world has changed. With increased regulatory scrutiny on bank commodity exposure, we think that ‘business as usual’ won’t be an option. While we don’t see an imminent liquidity crisis we note that bank credit may inevitably tighten, albeit over time. |
On Tuesday, Glencore’s Chief Executive Ivan Glasenberg said the company is embarking on an aggressive debt restructuring plan to trim its debt load.
B. of A. offers this breakdown of Glencore’s liabilities:
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?China Encourages Commercial Use of Graphene
The commercial application of graphene in China is expected to rise
after successful breakthroughs made by Chinese research teams, according to a
report by Shanghai-based China Business News.
According to sources from the Ministry of Industry and Information
Technology, the Chinese government is keen on supporting industries that can
help discover more ways to utilize graphene.
Some of the plans include the establishment of an industry alliance and
an innovation center, as well as the publication of guidelines on the
development of such industries.
The government has already approved plans to build an industrial park
for graphene and other related carbon material in Qingdao. An investment fund
of 100 million yuan has already been establishment to finance future graphene
projects.
Known for its exceptional strength, thermal conductivity and electric
conductivity, the material called graphene is made up of a single layer of carbon
atoms distinctive for its honeycomb-shaped lattice arrangement.
Commonly used in power cells, graphene is thought to be a possible
cheaper alternative conductor to silver.
Shenzhen University professor Liu Jianhong and his research team have
also developed a way to create graphene that will enhance its ability as an
electric conductor.
His team is currently exploring the development of graphene technology,
including the computerization of the production process.
Along with a joint venture with companies such as Gem Co., Liu and his
team were able to focus on developing commercial uses for graphene, which ties
in well with the State Council's "Made in China 2025" initiative, a
plan to usher the Chinese manufacturing sector into a new era.
The monthly Coppock Indicators finished September
DJIA: +41 Down. NASDAQ:
+138 Down. SP500: +65 Down.
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