Wednesday, 18 November 2015

America and China Spar Over the South China Sea.

Baltic Dry Index. 537 -13        Brent Crude 43.95

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

Kuwaiti investors, however, weren’t very concerned with risk, as their collective memories recalled a market panic in 1976 and 1977 in which “the government had moved in to support prices, buying heavily for its own account, so that nobody would suffer.” (1) These traders assumed that the government would always be on the sidelines ready to bail the market out if needed in the future, in effect, creating a floor underneath stock prices as well as a classic moral hazard.

Sounds like the Fed in New York 2015, or PBOC in China 2015.

We open this morning with Bloomberg on the atrocity in Paris. Despite the appalling casualty figures, Bloomberg reports that medically at least, Paris was prepared for a mass shooting. Are other potential target cities equally prepared, is a good question?

Hours Before the Terror Attacks, Paris Practiced for a Mass Shooting

Although dozens of victims suffered grave injuries, very few have died in hospitals.

November 17, 2015 — 5:58 PM GMT
The world watched in horror as the death toll from the Paris terror attacks steadily climbed. By the time the three-hour rampage ended on Saturday and authorities put the number of those killed at 129, onlookers could only brace for worse news to come. More than 400 people received medical treatment at hospitals in the stricken city; dozens of them were listed in critical condition. 

The second spike in the death toll never came. Just three of those hospitalized with grave injuries have died in the four days since the attacks. 

The world-class status of the French health-care system deserves much of the credit. But a good deal of preparation, experience, and more than a little bit of lucky timing also helped save lives.

Since the Charlie Hebdo attacks in January, from which 16 people died, Paris-area ambulance crews and emergency personnel have taken part in regular exercises designed to test their readiness for possible attacks. One such exercise was held on Friday morning, the day of the latest terror attacks. In a twist of fate, the simulated emergency was a mass shooting, according to Dr. Mathieu Raux, emergency room chief at the Pitié-Salpetrière hospital in Paris.

During Friday's exercise, trauma specialists used a centralized dispatch system to set priorities and direct victims to the ER best equipped to treat their injuries. Ambulance services made sure they were ready to roll, and hospitals verified that surgeons and staff could be quickly summoned to treat arriving victims. "We tested every link in the chain," Raux said. Because Paris emergency physicians work 24-hour shifts, virtually every ER doctor on duty in the city Friday night had already taken part in the exercise earlier that day.

The training paid off at Pitié-Salpetrière, a sprawling medical complex in southeastern Paris that specializes in emergency treatment of what doctors call "penetration trauma," such as gunshot wounds. The hospital was alerted to the attacks at 9:40 p.m., 20 minutes after explosions at the Stade de France marked the beginning of the rampage. Within an hour, just as the first ambulances were pulling up, Pitié-Salpetrière had 10 operating rooms prepared and fully staffed with surgeons and surgical nurses.

Below Dubai sets off to recreate Kuwait’s “Camel Market” bad debt bubble of 1981. The more things change, the more rigged our gambling dens have become, under crony casino capitalism of our overlord central banksters.

Dubai Banks Brace for Bad Debt as Borrowers Flee the Country

November 17, 2015 — 8:12 AM GMT Updated on November 17, 2015 — 12:04 PM GMT
Dubai’s slowing economy, the rout in commodities and strict debt repayment laws are reviving a phenomenon that symbolized the emirate’s crash in 2009: “skips,” or business owners who quietly leave the country to avoid punishment for defaulting on loans.
A rising number of smaller and medium-sized company owners are abandoning the United Arab Emirates without repaying debt, according to Emirates NBD PJSC, the country’s second-largest bank. People in the SME sector may have left behind 5 billion dirhams ($1.36 billion) of loans this year, Abdul Aziz Al Ghurair, Chief Executive Officer of Mashreqbank PSC and chairman of the U.A.E. Banks Federation, said in Dubai on Monday.
While so far limited in scope -- Emirates NBD says it’s seeing the phenomenon in areas such as commodities financing -- the “skips” recall the 2009 financial crisis when thousands of expatriates fled the country to avoid a local legal system which lacks a bankruptcy law and criminalizes bounced checks. They’re also a sign that the pain of lower oil prices and a slowing economy are being most felt by smaller companies that can’t survive long when lines of credit are restricted and customers stop paying.
“Some banks have been reacting to the fall in commodity prices by pulling bank loans and tightening credit standards, and that has added to the stress,” said Shabbir Malik, a banks analyst at EFG-Hermes Holding SAE. “Over the next two to three quarters we will see provisioning at the banks rise as a result of these skips and problems in the SME sector.”
Banks in the U.A.E. had focused on boosting loans to SMEs as they could typically charge higher interest rates than lending to large corporations. That shift also followed government measures to boost small business as a way to create jobs and diversify the economy. The U.A.E. last year stipulated that government agencies give at least 10 percent of their contracts to local smaller businesses, according to the Economy Ministry.
Shuaa Capital PSC, a local investment bank which recently made a push into SME lending, said Sunday it swung to a third quarter loss because of higher provisions for small and medium-sized customers.
Checks are still a common form of payment in the U.A.E. Banks often hold them as a security deposit against personal and business loans since the punishment for failing to having enough funds to cover them can be imprisonment. There’s also no bankruptcy law to protect debtors from creditors. A draft law on financial regulation and bankruptcy was approved by the cabinet earlier this year, but requires several steps before being passed.

Kuwait’s Souk al-Manakh Stock Bubble

By Jesse Colombo    (This article was written on May 12th, 2006)
Perhaps the greatest speculative mania of all time was Kuwait’s Souk al-Manakh stock bubble in the early 1980s, which is as fascinating as it was devastating. The bull market began when investing in local “Gulf Companies” became in vogue with Kuwaitis who wished to ride the coattails of the Middle East’s oil-driven economic boom of that time. A peculiar Kuwaiti custom allowed traders to pay for stocks using post-dated checks, under the assumption that default would be unthinkable. Unsurprisingly, human avarice prevailed as some traders speculated in stocks paid for by billions of dollars worth of unsecured checks, causing the stock market to inflate like a balloon and pop in a most analogous manner.

----The rise in oil prices in the late 1970s generated an unprecedented amount of wealth in the oil-rich Persian Gulf countries, with Kuwait receiving a particularly large share of the fortune. As U.S. stocks embarked down a perilous bear market, Kuwaiti shares were experiencing a seemingly unstoppable bull run as nouveau riche Kuwaitis turned to stocks as an investment vehicle to park their wealth. The bull market was abetted by the small supply of publicy-traded Kuwaiti companies, which consisted of “only a few dozen uninteresting companies [that] were traded on the official exchange.” (1) The scarcity was the result of the royal sheiks’ reluctance to grant the corporate charters necessary for companies to become publicly traded for fear that companies “might become vehicles for stock speculation.” (2) Kuwaiti investors, however, weren’t very concerned with risk, as their collective memories recalled a market panic in 1976 and 1977 in which “the government had moved in to support prices, buying heavily for its own account, so that nobody would suffer.” (1) These traders assumed that the government would always be on the sidelines ready to bail the market out if needed in the future, in effect, creating a floor underneath stock prices as well as a classic moral hazard.
By the summer of 1981, an unofficial over-the-counter stock market was formed called the Souk al-Manakh, which specialized in the trading of highly speculative “unregulated non-Kuwaiti companies,” such as those incorporated in Bahrain or the United Arab Emirates. (3) Formerly a camel trading venue (1), the Souk’s history was long intertwined with trading. Not long after the Souk’s founding, the market became a hotbed of speculation, overflowing with “portly gentlemen in flowing white gowns (thobes) with capacious pockets full of papers, worry beads in one hand, cigarette in the other.” (1) Interest in Kuwait’s heavily-regulated official market dwindled as the Souk earned the reputation of being the more exciting of the two markets, in which one could double their money within a few months. Sharing more similarities with a casino than a stock market, the Souk al-Manakh attracted wealthy high-rollers whose preferred method of trading entailed placing orders via car phones. (1) Boredom during Ramadan spurred daily flurries of trading activity that lasted well into midnight as trading became a form of entertainment.
Up next, America and China take up opposing stances over the South China Sea, as APEC meets. But the real clash is expected later in the week at the East Asia Summit in Kuala Lumpur. Ding, ding, ding, in the Red corner…..

Obama puts South China Sea dispute on agenda as summitry begins

Tue Nov 17, 2015 6:02am EST
U.S. President Barack Obama put tensions over Beijing's claims to the South China Sea squarely on the agenda ahead of an Asia-Pacific summit on Tuesday, pointedly visiting the main warship of close ally the Philippines shortly after he landed in Manila.

While Obama affirmed a commitment to the Philippines' security and to freedom of navigation in regional waters, a senior official in Beijing said China was the real victim of the waterway dispute because other countries had illegally occupied islands there.

The verbal jousting could cast a shadow over the Asia Pacific Economic Cooperation (APEC) summit of about 20 heads of state and government, including Chinese President Xi Jinping. Manila has said it will not bring up the maritime dispute to avoid embarrassing Xi, but could not prevent others from doing so.

Xi also arrived in Manila on Tuesday, but did not make any public comments.

Shortly after Air Force One touched down in Manila, Obama boarded the Gregorio del Pilar, a Philippines navy frigate that was a U.S. Coast Guard cutter until 2011 but on Tuesday flew the flags of the two allies.

"We have a treaty obligation, an iron-clad commitment to the defense of our ally the Philippines," he said, flanked by about two dozen U.S. and Philippines uniformed navy personnel. "My visit here underscored our shared commitment to the security of the waters of this region and to freedom of navigation."

He did not mention China but the symbolism of his visit was hard to miss: the ageing vessel is now a mainstay of the Philippine Navy, operating around the Spratly islands in the South China Sea that are claimed by both Manila and Beijing.

China says has shown 'great restraint' in South China Sea

Tue Nov 17, 2015 3:03am EST
China has shown "great restraint" in the South China Sea by not seizing islands occupied by other countries even though it could have, a senior Chinese diplomat said on Tuesday ahead of two regional summits where the disputed waterway is likely to be a hot topic.

Beijing has overlapping claims with Vietnam, the Philippines, Malaysia, Taiwan and Brunei in the South China Sea, through which $5 trillion in ship-borne trade passes every year.

Reclamation work and the building of three airfields and other facilities on some of China's artificial islands in the Spratly archipelago have alarmed the region and raised concern in Washington that China is extending its military reach deep into maritime Southeast Asia.

But China was the real victim as it had "dozens" of its islands and reefs in the Spratlys illegally occupied by three of the claimants, Chinese Vice Foreign Minister Liu Zhenmin told a news conference in Beijing.

He did not name the countries, but all claimants except Brunei have military fortifications in the Spratlys.

"The Chinese government has the right and the ability to recover the islands and reefs illegally occupied by neighboring countries," Liu said.

"But we haven't done this. We have maintained great restraint with the aim to preserve peace and stability in the South China Sea."

Tensions over the South China Sea are likely to dominate the East Asia Summit in Kuala Lumpur later this week.

While not on the formal agenda of the Asia-Pacific Economic Cooperation (APEC) summit on Wednesday and Thursday in Manila, the South China Sea is expected to be discussed on the sidelines.
We end for the day with iron ore resuming its slump. It looks like the commodities slump will be “lower for longer” across the board.

Iron ore plunges 4.5% on China demand outlook

Nov 18 2015 at 5:42 AM Updated Nov 18 2015 at 8:11 AM
Iron ore lurched to a four-month low on concern China's falling steel production will erode demand and boost stockpiles.

Ore with 62 per cent content delivered to Qingdao sank 4.5 per cent to $US45.58 a dry metric ton on Tuesday, the lowest since the record on July 8, according to Metal Bulletin Ltd. The price bottomed at $US44.59 for daily price data dating back to May 2009.

The global iron ore market faces little buying interest seen in China, Australia & New Zealand Banking Group said on Tuesday before the price data. Iron ore breached $US50 last month amid concern a global glut will swell as the largest miners including BHP Billiton and Vale expand output just while mills in China cut steel output. Production of steel shrank again in October, official data show, and commodity trader Noble Group Ltd. has forecast further declines are highly probable.

"Prices are still under pressure due to oversupply," Michael Zhu, president of Hong Kong-based trader Millennia Resources, said before the data on Tuesday. "There is hardly any Chinese steel mill making profit now, so the demand will be weak through year-end," said Zhu, a former global sales director of Vale.

Iron ore's losses come as commodities faced renewed pressure on Tuesday, with copper sliding to a multi-year low. Iron ore may test the $US40 level before year-end as demand faces challenges from steel-output cuts, mainly in China, according to Standard Chartered.

US oil closes down $1.07, or 2.56%, at $40.67 a barrel

17 November 2015
Crude oil settled more than 2 percent lower on Tuesday, resuming its slide after a one-day pause, as oversupply concerns returned to suppress a market briefly lifted by geopolitical worries linked to the Paris attacks.

A Reuters poll of analysts forecast that U.S. crude stockpiles rose for an eight straight week last week, building by 1.6 million barrels to reach near-record highs above 490 million barrels seen in April.

Industry group American Petroleum Institute issued its own preliminary report on the stockpile situation at 4:30 p.m. EST (2130 GMT), two hours after market settlement. West Texas Intermediate futures moved higher, just above $41, after API was reported to have shown a slight draw in supply.

Official inventory data from the U.S. government's Energy Information Administration is due on Wednesday.

At the Comex silver depositories Monday final figures were: Registered 43.34 Moz, Eligible 118.27 Moz, Total 161.61 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Will Finland beat Great Britain to the EUSSR exit?

Finland to discuss leaving eurozone after disgruntled citizens force debate

Finnish politicans to debate "Fixit" in parliament following citizens' petition demanding referendum on euro membership

By Reuters 5:09PM GMT 16 Nov 2015
Finland's parliament will debate next year whether to quit the euro, a senior parliamentary official said on Monday, in a move unlikely to end membership of the single currency but which highlights Finns' dissatisfaction with their country's economic performance.
The decision follows a citizens' petition which has raised the necessary 50,000 signatures under Finnish rules to force such a debate, probably the first such initiative in any country of the 19-member euro zone.
"There will be signature checks early next year and a parliamentary debate will be held in the following months," said Maija-Leena Paavola, who helps guide legislation through parliament.
The petition - which will continue to gather signatures until mid-January - demands a referendum on euro membership, but this would only go ahead if parliament backed the idea.

Despite the initiative, a Eurobarometer poll this month showed 64pc of Finns backed the common currency, though that is down from 69pc a year ago.

But the Nordic country has suffered three years of economic contraction and is currently performing worse than any other country in the eurozone.

Official figures this week showed the economy shrank by 0.6pc in the third quarter.
Some Finns say the country's prospects would improve if it returned to the markka currency and regained the ability to set its own interest rates, pointing to the example of neighboring Sweden, which is outside the euro. The markka could then devalue against the euro, making Finnish exports less expensive.
"Since 2008 the Swedish economy has grown by 8pc, while ours has shrunk by 6 percent," said Paavo Vayrynen, a Finnish member of the European Parliament who launched the initiative.
"Now is a good time to have a wider debate whether we should continue in the eurozone or not," said Vayrynen, a veteran lawmaker from the co-ruling Centre Party who is known for his opposition to greater European integration.
The center-right government is struggling to balance public finances and improve export competitiveness through "internal devaluation", including cuts to workers' holidays and other benefits, amid opposition from unions.
Before 1992, Finland devaluated its markka currency time and again to improve export competitiveness.

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? 
Public Release: 16-Nov-2015

Pioneering research boosts graphene revolution

University of Exeter
Pioneering new research by the University of Exeter could pave the way for miniaturised optical circuits and increased internet speeds, by helping accelerate the 'graphene revolution'.
Physicists from the University of Exeter in collaboration with the ICFO Institute in Barcelona have used a ground-breaking new technique to trap light at the surface of the wonder material graphene using only pulses of laser light.
Crucially, the team of scientists have also been able to steer this trapped light across the surface of the graphene, without the need for any nanoscale devices. This dual breakthrough opens up a host of opportunities for advances in pivotal electronic products, such as sensors and miniaturised integrated circuits.
The new research features in the latest online edition of the respected scientific journal, Nature Physics.
Dr Tom Constant, lead author on the paper and part of Exeter's Physics and Astronomy Department said: " This new research has the potential to give us invaluable insight into the wonder material and how it interacts with light. A more immediate commercial application could be a simple device that could easily scan a piece of graphene and tell you some key properties like conductivity, resistance and purity ."
Dr Constant and his colleagues used pulses of light to be able to trap the light on the surface of commercially-available graphene. When trapped, the light converts into a quasi-particle called a 'surface plasmon', a mixture of both light and the graphene's electrons.
Additionally, the team have demonstrated the first example of being able to steer the plasmons around the surface of the graphene, without the need to manufacture complicated nanoscale systems. The ability both to trap light at a surface, and direct it easily, opens up new opportunities for a number of electronic-based devices, as well as help to bridge the gap between the electronics and light.
Dr Constant said: "Computers than can use light as part of their infrastructure have the potential to show significant improvement. Any advance that reveals more about light's interaction with graphene-based electronics will surely benefit the computers or smartphones of the future."

The monthly Coppock Indicators finished October

DJIA: +31 Down. NASDAQ: +125 Down. SP500: +53 Down. 

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