Friday 30 October 2015

Hunting “Prettier” Brides.



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.”
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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. 

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