The Final Bubble.

Baltic Dry Index. 766 -21        Brent Crude 50.13

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

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

J. K. Galbraith.

We are deep in the end game of the Fedster’s final bubble. When the next Lehman hits, and I think it may have arrived in the shape of Germany’s Volkswagen, or Glencore and a flotilla of wounded mining and commodities trading companies, or Germany’s epic blunder in inviting all the world’s ecomomic migrants to flock to Germany and get on the welfare rolls. The crooked central banksters are all out of ammo to deal with the consequences of the next downturn, and are desperately pushing the current stock bubble hoping for something to turn up. Adopting voodoo remedies of NIRP or banning cash as we know it in favour of cash that deliberately declines in value the longer you hold it, will only make matters worse, in my opinion. Nationalising the banks is an option, this time round not bailing out the shareholders or bondholders, but how many banks does any government need?  

Very bad things happen after the Fed’s final bubble bursts. On every continent and in very nation, people of wealth, even quite modest wealth, now need some insurance from having some fully paid up physical precious metals, held outside of the banks and hypothecating financial houses.

Below, compare and contrast.

“It is difficult not to marvel at the imagination which was implicit in this gargantuan insanity. If there must be madness something may be said for having it on a heroic scale."

J. K. Galbraith. The Great Crash: 1929.

Dow, S&P 500 log best closing levels since August’s plunge

Published: Oct 15, 2015 5:02 p.m. ET

Goldman Sachs’s rally leads Dow to second-best gain in October

U.S. stocks rebounded from a two-day drop to reclaim key technical levels Thursday as robust gains by financial shares helped breathe new life into the market.

“Today’s rally is the result of generally better than expected results, especially in the financial sector [and] the belief that interest rates will now not increase until late winter or early spring 2016,” said Kent Engelke, chief economic strategist at Capitol Securities Management.

“Bank loan portfolios are healthy thus increasing the odds of greater lending, hence greater economic activity,” he said.

The run-up in the broader market pushed both the S&P 500 and the Dow industrials to their best closing levels since markets plunged in late August, according to FactSet data.

The S&P 500 SPX, +1.49%  rose 29.62 points, or 1.5%, to close at 2,023.86, gaining a foothold above the psychologically-important 2,000 level. All 10 sectors in the large-cap index finished higher with the financial and health-care sectors both up more than 2%. Thursday’s close marks the best level for the index since Aug. 20, when stocks were at 2,035.73, according to FactSet data.

The Dow Jones Industrial Average DJIA, +1.28%  advanced 217 points, or 1.3%, to finish at 17,141.75. That is the blue-chips gauge’s best close since Aug. 19, when it ended at 17,349.

Meanwhile, the Nasdaq Composite COMP, +1.82%  vaulted 87.25 points, or 1.8%, higher to 4,870.10, buoyed by beaten down biotech stocks.

----Stocks were beaten down on Wednesday, when the Dow industrials slid nearly 1% as a dour forecast from Wal-Mart Stores Inc. WMT, -1.17%  and the Fed’s Beige Book survey amplified concerns about the economic recovery.

Barring any major negative developments, the market is expected to maintain its upward momentum for the time being, according to Engelke.
More
http://www.marketwatch.com/story/us-stocks-poised-for-firm-gains-ahead-of-trio-of-fed-speakers-2015-10-15?dist=tcountdown

PTC Therapeutics shares fall after MD drug study result

Published: Oct 15, 2015 4:57 p.m. ET

http://www.marketwatch.com/story/ptc-therapeutics-shares-fall-after-md-drug-study-result-2015-10-15?dist=tcountdown

Mattel profit falls as Barbie sales decline again

Published: Oct 15, 2015 4:18 p.m. ET

http://www.marketwatch.com/story/mattel-profit-falls-as-barbie-sales-decline-again-2015-10-15?dist=tcountdown

AMD inks joint venture as revenue falls

Published: Oct 15, 2015 5:22 p.m. ET

http://www.marketwatch.com/story/amd-inks-joint-venture-as-revenue-falls-2015-10-15?dist=tcountdown

Warren Buffett's $390 million loss on Wal-Mart's stock is nothing next to the Walton family's loss

Published: Oct 14, 2015 3:29 p.m. ET

http://www.marketwatch.com/story/warren-buffetts-390-million-loss-on-wal-marts-stock-is-nothing-next-to-the-walton-familys-loss-2015-10-14?link=MW_popular

Elsewhere, it was more of the same old stock market bubble story. Bad news is good news, until one day out of the blue, it isn’t. Former Vice President Cheney famously opined that “deficits didn’t matter,” and they didn’t until one day in the midst of the Greenspan-Bernanke bubble they did. Bear Stearns, Merrill, Lehman, amongst many others, blew up, taking out Greece and half of the EUSSR with them.

China economic growth seen slowing despite policy easing

Thu Oct 15, 2015 5:09am EDT

China's economic growth is expected to slow to 6.5 percent in 2016 from an expected 6.8 percent in 2015, even as the central bank eases policy further to ward off a sharper slowdown, a Reuters poll showed.

A 25-basis-point reduction in benchmark interest rates and another 50 basis points of cuts in banks' reserve requirement ratio (RRR) are expected by year-end, analysts surveyed by Reuters said.

In a bid to stoke activity, the central bank already has cut lending rates five times since November to 4.60 percent, and lowered the amount of cash that the biggest banks must hold as reserves to 18.0 percent.

But some analysts believe such policy moves have not been as effective as in the past when the economy was more tightly controlled and debt levels were much lower.

The central bank is expected to cut reserve requirements by a further 150 bps in 2016 but keep interest rates unchanged, the poll showed.

The world's second-largest economy is forecast to grow 6.8 percent this year, cooling from 7.3 percent in 2014 and the slowest pace in a quarter of a century, according to the median forecast of 62 analysts.

Growth is expected to slow further to 6.5 percent in 2016.

The forecasts are lower than a previous poll in July, when analysts thought the economy would grow 7 percent in 2015 - in line with the government's target - and 6.7 percent in 2016.

More
http://www.reuters.com/article/2015/10/15/us-economy-poll-china-idUSKCN0S90J220151015

Fed hike more problematic for global economy than before: ECB

Thu Oct 15, 2015 5:28am EDT

U.S. rate hikes could have greater global repercussions than in the past and affect the euro zone more in some respects than the domestic market, European Central Bank Vice President Vitor Constancio said on Thursday.

A Federal Reserve rate rise would have a bigger impact because emerging markets, particularly China, are more integrated into the global economy than before, countries are more interlinked in production, cross-border capital flows have increased, and forward guidance has become a crucial monetary policy instrument, Constancio said.

The Fed skipped a chance to hike rates in September but policymakers have repeatedly said the United States is on course for a hike later this year with some suggesting a move as soon as October.

An additional hurdle is that central banks do not have experience in raising interest rates from an extended period at zero, so they will have to learn through practice, without a full understanding of how economies and markets may respond, Constancio told a conference in Hong Kong.

The biggest global impact of a Fed hike will be through capital markets, not international trade, and German yields already follow the change of U.S. yields in response to Fed tightening by more than one third, Constancio said.

More
http://www.reuters.com/article/2015/10/15/us-ecb-fed-idUSKCN0S906320151015

Strong dollar is restraining economy, Fed’s Beige Book finds

Published: Oct 14, 2015 2:22 p.m. ET

WASHINGTON (MarketWatch) – A key report about the U.S. economy released Wednesday offered a cautious take on the U.S. economy, further lending credence to speculation that the Federal Reserve will not raise interest rates this year.

The Federal Reserve’s Beige Book indicated some slowing in the economy, with two of the 12 districts – Richmond and Chicago — reporting that the pace of growth had slowed from mid-August until early October. One district, Kansas City, noted an overall slight decline in economic activity.

The nine remaining districts, if they described growth, reported it as “modest” or “moderate.”

The strong dollar acted like a brake on U.S. economic activity, particularly in manufacturing, energy and tourism.

---- The Beige Book report comes two weeks before the Fed meets to set interest rate policy.

Fed officials said they held off hiking rates in September after China’s surprise currency devaluation led to renewed questions about the health of emerging markets in general. The dollar strengthened markedly against several currencies as a result amid volatile financial markets.

U.S. central bankers said since the meeting that they delayed a rate increase to see if there was any impact from these global developments on the domestic U.S. economy. The Beige Book report provides some clear examples.

The strong dollar was mentioned as a headwind for petroleum, petrochemicals, and farm exports.

In one telling anecdote, officials at a port in the Richmond district, said inbound loaded container traffic grew rapidly since August while departing vessels “filled unused export space by removing stored empty containers from the ports.”

More
http://www.marketwatch.com/story/strong-dollar-restraining-activity-beige-book-finds-2015-10-14

VW Will Recall 8.5 Million Rigged Diesels After German Hard Line

October 15, 2015 — 9:22 AM BST Updated on October 15, 2015 — 9:09 PM BST

Volkswagen AG will embark on one of the biggest recalls in European automotive history, affecting 8.5 million diesel vehicles, after German authorities threw out the carmaker’s proposal for voluntary repairs.

The Federal Motor Transport Authority, or KBA, demanded a recall of 2.4 million cars in Germany after reviewing proposals Volkswagen filed last week to fix vehicles fitted with software designed to cheat on pollution tests, German Transport Minister Alexander Dobrindt said Thursday in Berlin. The mandatory recall is the basis for callbacks throughout Europe, where diesel accounts for more than half the market.

Germany’s rare public snub of its biggest carmaker came after Volkswagen circumvented diesel emissions regulations starting in 2008. The country’s demands will speed a process that Volkswagen said will last beyond 2016, and give authorities more control.

“It’s an unusual measure to be ordering a mandatory recall,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI. “It shows to me that the KBA is losing patience with VW’s slow response on what to do to fix the engines so far. Customers have been left unsettled.”

The 8.5 million affected cars represent slightly less than one-third of Volkswagen’s auto deliveries in the region from 2009 through August, based on sales figures the company published for the five divisions involved.
More
http://www.bloomberg.com/news/articles/2015-10-15/vw-faces-mandatory-recall-in-germany-over-diesel-cheating

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.

At the Comex silver depositories Thursday final figures were: Registered 42.88 Moz, Eligible 120.11 Moz, Total 163.00 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.

No crooks today, just Russia getting on with the job NATO couldn’t accomplish in over two years of trying.

Why isn't Russia targeting ISIS in Syria? Because it never said it would

Many in the West have criticized Russia's intervention in Syria for not targeting IS. But Russia does not view 'moderate' rebels as any better than their IS counterparts.

By Fred Weir, Correspondent October 14, 2015

Moscow — The videos posted almost daily by the defense ministry show Russian strike fighters in action over Syria, hammering "terrorist infrastructure" with precision-guided munitions. Meanwhile, Russian media reports speak of major gains by Syrian armed forces advancing behind a firestorm of Russian air support.

But there is growing controversy over what the Russians are actually accomplishing with their two-week-old intervention in Syria's bitter and multi-sided civil war, and what their actual war objectives may be.

Western sources argue that most Russian air strikes have been directed not at the generally acknowledged enemy, the self-declared Islamic State, but  against "moderate" rebels. Those forces have been fighting to overthrow the minority-led dictatorship of Bashar al-Assad for almost four years, with assistance from the CIA, Turkey, and Persian Gulf states. The US Central Command has even alleged that Russian air strikes are actually enabling IS to gain ground by weakening other rebel formations that are opposed to the extremists.

Russian sources insist that they are hitting IS hard. But more importantly, they say that they never made any promises to avoid attacking other rebel groups. They argue that while the US and its allies are fighting an ineffectual two-front war against IS and Assad, Russia's strategy has always been to bolster Assad's forces from above in a bid to turn the tide of the rebellion.

"Russia isn't playing this game of distinguishing between 'good' terrorists and 'bad' ones," says Yegeny Satanovsky, president of the independent Institute of Middle East Studies in Moscow, and a strong backer of the Kremlin campaign. "For Russia, the only way to do this is to back Syria's existing central government, which is the force that has boots on the ground, and put an end to this rebellion."

"It's not that we love Assad," Mr. Satanovsky says, "but that we've already seen what happens when central governments get destroyed: monsters come rushing into the vacuum. If Damascus should fall, it won't be gentle pro-Western rebels who come marching in, but the genocidal maniacs of IS and Al Qaeda."

More

http://www.csmonitor.com/World/Europe/2015/1014/Why-isn-t-Russia-targeting-ISIS-in-Syria-Because-it-never-said-it-would

Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.

John Kenneth 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 energy mankind’s future from the 21^st century onwards? DC? A quantum computer next?

What California does today, America does tomorrow, Europe does the day after.

Homes Are Being Tested as Grid-Responsive Assets—No Utilities Required

by Jeff St. John  October 14, 2015

Energy-smart homes mainly pay themselves off in energy saved. They can also enlist in a demand-response program and get paid a set amount for turning down power use via direct utility control, or in response to set price signals.

But rarely do we see energy-responsive homes playing the grid markets.

Grid operators are looking for megawatts -- or at least, hundreds of kilowatts -- of flexible load to participate in energy and ancillary services markets. Even if lots of homes can be aggregated to reach those volumes, there are the costs of connecting them to real-time dispatch and verification systems to consider. There’s also the fact that most regulations to allow this kind of aggregated, grid-responsive activity are very limited.

Now a new pilot project being conducted by grid giant Schneider Electric and startup Ohmconnect is seeking to overcome these barriers. Under the pilot, customers of California’s big three utilities can apply to receive a full suite of Schneider’s Wiser home-energy management devices -- Wi-Fi-connected thermostats, smart plugs, remote-controlled pool pumps, and even smart electric-vehicle chargers -- at reduced cost.

Then, Ohmconnect will use its software to aggregate that whole-home load flexibility and put it into service for California’s grid operator, CAISO. It can do this without having a direct relationship with utilities, under some of the state’s first-ever pilot programs that allow non-utility actors to participate directly in the same systems that call upon large generators and demand response portfolios to help CAISO manage its real-time grid-balancing needs.

“This is a first-of-its-kind pilot, and one that we’re particularly excited about since it opens up the opportunity to directly control some of the largest and most predictable load resources in California,” Curtis Tongue, co-founder of Ohmconnect, said in an interview last week.

For homeowners who commit themselves to turning over large chunks of their home energy to this remote control, the paybacks can be significant, said Tongue.

“This device automation is something we almost stumbled on,” he said. “When we first started, our service was an email and text-messaging platform. It was only about a month ago or so when some of our super-users said, ‘I have all these devices connected in my home, it only takes me a few minutes to hook them up to turn off AC, to turn off lights -- and it would be easy for you turn them all off via automated dispatch.’”

Some of these “super-users” -- early adopters who’ve connected lots of in-home loads to wireless control, plus a few big ones like a pool pump or a smart EV charger -- have been able to earn about $200 in annual PayPal or Venmo payments from using the service.

That’s not energy savings, by the way. It’s revenue, earned by promising to make a certain amount of load ready to disappear at any given hour the next day, and then getting paid based on the 15-minute locational marginal price (LMP).  

More

http://www.greentechmedia.com/articles/read/debuting-the-grid-market-connected-smart-home

Another weekend. What could possibly go wrong? Have a great weekend everyone.

If all else fails, immortality can always be assured by spectacular error.

J. K. Galbraith.

The monthly Coppock Indicators finished September

DJIA: +41 Down. NASDAQ: +138 Down. SP500: +65 Down.