Baltic Dry Index. 739 -20 Brent Crude 46.83
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
“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.
The Baltic Dry [shipping] Index has been signalling weakness in the global economy for months, but now the US economy also seems to be stalling. QE forever and ZIRP may be good for Wall Street’s banksters and Great Vampire Squids, but out it the real world far from the gambling den casinos, Uncle Scam is starting to look snake bit. With the EUSSR already dead in the water, China barely expanding at all, no matter what the official scripted stats say, Japan in the process of committing national suicide, emerging markets undergoing commodities cold turkey, according to the Fedster’s the US economy was the one bright spot and supposed to be nearing “escape velocity.” The Fedster’s were even talking about an interest rate hike.
This morning it all looks so different. Suddenly the global economy looks to be staring a new recession in the face. Bad things lie ahead, it seems. When Uncle Scam sneezes, the rest of the world does what?
Dow transports take a beating
Published: Oct 27, 2015 3:21 p.m. ET
Dow transports tumble 2.8%, while Dow industrials slip just 0.3%
The Dow Jones Transportation Average took a beating Tuesday, falling much farther than the broad market, on the back of big selloffs in the shares of railroad companies and disappointing results from JetBlue Airways Inc. and United Parcel Service Inc.The index DJT, -2.64% slumped 231 points, or 2.8%, in afternoon trade, with all 20 components trading lower.
Union Pacific Corp.’s stock led the decline, slumping 4.9%. Among some of its railroad rivals, shares of Kansas City Southern KSU, -4.39% slid 4.1%, toward the lowest close since December 2012, and CSX Corp. shares CSX, -3.80% dropped 4%.
The railroad companies all reported earlier this month third-quarter revenue that fell short of expectations.
----Many technical analysts believe the Dow transports and Dow industrials have a symbiotic relationship, based on the century-old Dow Theory of market analysis, which holds that the transports must confirm the movement of the industrials for a trend to have staying power.
“The underlying fundamentals of the theory hold that the industrials make and the transports take,” according to S&P Dow Jones Indices, which maintains and licenses the Dow indexes. “If the transports aren’t taking what the industrials are making, it portends economic weakness and market problems, Dow Theorists maintain.” Read more about the Dow Theory.
With Tuesday’s selloff, the Dow transports are down 12% year to date, while the Dow industrials have slipped 1.4%.
http://www.marketwatch.com/story/dow-transports-take-a-beating-2015-10-27?dist=tcountdown
U.S. Companies Warn of Slowing Economy
Big firms to post first decline in both earnings and sales since the recession
Oct. 25, 2015 8:11 p.m. ETQuarterly profits and revenue at big American companies are poised to decline for the first time since the recession, as some industrial firms warn of a pullback in spending.
From railroads to manufacturers to energy producers, businesses say they are facing a protracted slowdown in production, sales and employment that will spill into next year. Some of them say they are already experiencing a downturn.
“The industrial environment’s in a recession. I don’t care what anybody says,” Daniel Florness, chief financial officer of Fastenal Co. , told investors and analysts earlier this month. A third of the top 100 customers for Fastenal’s nuts, bolts and other factory and construction supplies have cut their spending by more than 10% and nearly a fifth by more than 25%, Mr. Florness said.
Caterpillar Inc. last week reduced its profit forecast, citing weak demand for its heavy equipment, and 3M Co. , whose products range from kitchen sponges to adhesives used in automobiles, said it would lay off 1,500 employees, or 1.7% of its total, as sales growth sagged for a wide range of wares.
The weakness is overshadowing pockets of growth in sectors such as aerospace and technology.
Industrial companies are being buffeted on multiple fronts. The slump in energy prices has gutted demand for drilling equipment and supplies. Economic expansion is slowing in China and major emerging markets such as Brazil, which U.S. companies have relied on for sales growth. And the dollar’s strength also has eroded overseas profits.
----Profit and revenue are falling in tandem for the first time in six years, with a third of S&P 500 companies reporting so far. Analysts expect the index’s companies to book a 2.8% decline in per-share earnings from last year’s third quarter, according to Thomson Reuters.
Sales are on pace to fall 4%—the third straight quarterly decline. The
last time sales and profits fell in the same quarter was in the third period of
2009.
Morehttp://www.wsj.com/articles/u-s-companies-warn-of-slowing-economy-1445818298
U.S. Economic Data Has Never Been This Weak For This Long
by ZeroHedge •
Despite the ongoing propaganda reinforcing America’s “cleanest sheets in a brothel” economic growth, the fact is, there is a reason why The Fed folded, why Draghi doubled-down, why China cut, and why Kuroda will likely unleash moar QQE this week. It appears the ‘trap’ that central planners have set for themselves – by enabling massive financial asset inflation in the face of what is now the longest streak of economic weakness and data disappointment on record – now looks set to prove their impotence and/or Enisteinian insanity.----Corporate profit margins have taken a sharp hit and corporate profits for the S&P are now down 3% yoy despite continued share buybacks.
Through this entire period, markets
have continually expected happy days to be just around the corner.
As a result, we have seen economic surprises for the US negative for the
longest stretch in the history of the data series:
To make it a little clearer, this period of economic weakness and disappointment is not just the longest on record, but it is entirely unprecedented…
More
http://davidstockmanscontracorner.com/u-s-economic-data-has-never-been-this-weak-for-this-long/
"In
economics, hope and faith coexist with great scientific pretension."
J. K.
Galbraith.
At the Comex silver depositories Monday
final figures were: Registered 43.47 Moz, Eligible 118.53 Moz, Total 162.00
Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
It’s not just the Baltic Dry Index signalling
trouble arriving in spades.
China Containerized Freight Index Collapses, Hits New Low
by Wolf Richter • October 25, 2015
Just when you thought it couldn’t get worse….
A week ago, we pointed out how China’s dropping exports and plunging imports – the “inevitable fallout from China’s unsustainable and poorly executed credit splurge,” according to Thomson Reuters – had collided with long-term bets by the shipping industry that has been counting on majestic endless growth.The industry has been adding capacity in quantum leaps, where “the scramble to order so-called ultra-large container vessels had turned into a stampede,” as the Journal of Commerce put it. So we said, Pummeled by Lousy Global Demand and Rampant Overcapacity, China Containerized Freight Index Collapses to Worst Level Ever.
And now, the China Containerized Freight Index (CCFI) has dropped to an even worse level.
Unlike a lot of official data emerging from China, the index, which is operated by the Shanghai Shipping Exchange and sponsored by the Chinese Ministry of Communications, is raw, unvarnished, not seasonally adjusted, or otherwise beautified. It’s volatile and a reflection of reality, as measured by how much it costs, based on contractual and spot market rates, to ship containers from China to 14 major destinations around the world.
These rates are a function of oversupply of shipping capacity and of lackluster demand for shipping containers to distant corners of the world. They’ve been in trouble since February. “Trouble” is a euphemism. They relentlessly plunged.
By early July, the index dropped below 800 for the first time in its history, which started in 1998 when the index was set at 1,000. It soon recovered to about 850. And just when bouts of hope were rising that the worst was over, it plunged again and hit even lower levels.
The latest weekly reading dropped another 1.7% from the prior week to 752.21, the worst level ever. The CCFI is now 30% below where it had been in February this year and 25% below where it had been 17 years ago at its inception.
----The Shanghai Containerized Freight Index (SCFI), also operated by the Shanghai Shipping Exchange, tracks spot rates (not contractual rates) of shipping containers from Shanghai to 15 major destinations around the world. It’s even more volatile than the CCFI. But being based on spot rates, it’s a good indicator where the CCFI is headed.
For last week, the SCFI plunged 5.4% to a new record low of 537.73, down 46% from where it had been at its inception in 2009 when it was set at 1,000 – and down 52% from February:
----Not that any of this matters for stocks. What matters are central banks. And they have once again spoken. They’re frazzled by these signs of “unexpected” deterioration. Even China’s official GDP growth rate, at 6.9%, inflated as it may be, is now down to the worst level since the Financial Crisis.
So Friday morning, while perhaps still smarting from the Shanghai stock
index’s plunge of 3.1% on Wednesday, the People’s Bank of China stepped in and
announced that it would lower its benchmark interest rates by a quarter point,
the sixth cut since November, and banks’ reserve-requirement ratios by half a
point, all to flood the economy with even more money.
Whatever rounds of speculation this might trigger, it won’t stimulate
global demand for Chinese goods and won’t help exports one iota. However, it
goosed stocks worldwide on Friday. And that’s what matters.
More
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.
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?United Utilities installs Europe's largest floating solar power project on reservoir
Water giant to spend £3.5m installing solar panels on reservoir near Manchester to help cut its energy costs
Water giant United Utilities is to install Europe’s biggest floating solar power system on a reservoir near Manchester, as it seeks to capitalise on the novel technology to cut its energy costs.The 12,000 panel, £3.5m development will be only the second of its kind in Britain, dwarfing an 800-panel pilot in Berkshire last year, and will be the second biggest in the world after a scheme in Japan.
Installation of the panels is due to begin on Monday at the Godley reservoir in Greater Manchester, where it will provide a third of the power for a water treatment works.
The system is scheduled to be completed before Christmas, in order to qualify for subsidies before they are due to be drastically cut in the new year.
United Utilities’ three megawatt (MW) scheme is currently eligible for subsidies of almost 6p per kilowatt-hour (KWh), but ministers have proposed to cut the rate to about 1p per KWh, under plans which have caused widespread anger in the solar industry.
United Utilities is also exploring plans for a second floating solar
project near Lancaster, but Neil Gillespie, its director of energy strategy,
said it was “doubtful” whether that would go ahead if the subsidy cuts were as
harsh as planned.
The water giant’s use of the floating solar technology at Godley is a
coup for Mark Bennett, an entrepreneur who introduced the technology to the
country last year with the pilot project on his own farm in Berkshire.
United
Utilities is also in the process of installing up to 100 MW of solar panels
on its land. It aims to install up to 40 MW in time to qualify for the current
rate of subsidy, but Mr Gillespie said it was hopeful it would still be able to
proceed with many of the remainder of the projects even if subsidies were cut. The land-based technology is cheaper than the floating panels.
Paul McCarren, energy services director at Forrest, the contractor working with United Utilities on Godley and several of its land-based solar projects, estimated that ground-mounted solar farms could currently get a 12pc to 14pc return, and that this would still be viable with at least 9pc returns even if subsidies were slashed.
More
The monthly Coppock Indicators finished September
DJIA: +41 Down. NASDAQ:
+138 Down. SP500: +65 Down.
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