Tuesday, 10 November 2015

Stall Speed!

Baltic Dry Index. 628 -03        Brent Crude 47.35

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

The old believe everything; the middle-aged suspect everything; the young know everything.

Oscar Wilde.

We open today with the cost of preventing the next Lehman. More exactly, the cost to the banks, their shareholders and bondholders, and not the taxpayers, when the next Lehman hits. To this old dinosaur trader, my guess is that the banksters will still pull the wool over the taxpayer’s eyes when the next Lehman hits, and the taxpayers will still be on the hook for yet another bailout. Below, the oddicial plan to end too big to fail or jail.

Banking Giants Learn Cost of Preventing Another Lehman Moment

November 9, 2015 — 8:30 AM GMT Updated on November 9, 2015 — 9:46 AM GMT
Banking behemoths led by HSBC Holdings Plc and JPMorgan Chase & Co. now know the cost they’ll have to shoulder so the global financial system doesn’t have another Lehman moment.

The Financial Stability Board, created by the Group of 20 nations in the aftermath of the crisis, published its plan for tackling banks seen as too big to fail. The most systemically important lenders must have total loss-absorbing capacity equivalent to at least 16 percent of risk-weighted assets in 2019, rising to 18 percent in 2022, the FSB said on Monday. A leverage ratio requirement will also be imposed, rising from 6 percent initially to 6.75 percent. Bloomberg reported these numbers on Oct. 2.

The shortfall banks face under the 18 percent measure ranges from 457 billion euros to 1.1 trillion euros ($1.2 trillion), depending on the instruments considered, according to the FSB. Excluding the four Chinese banks in the FSB’s list of the world’s 30 most systemically important institutions, that range drops to 107 billion euros to 776 billion euros.

“The TLAC announcement is hugely important; it’s a milestone of the first order in bank reform and ending too big to fail,” Wilson Ervin, vice chairman of the Group Executive Office at Credit Suisse Group AG, said before the announcement. “There are a lot of important details to consider and hopefully improve, but the big picture is, if you have a bank rescue fund with $4 trillion to $5 trillion of resources, you can break the back of this problem.”

Bank of England Governor Mark Carney, who heads the FSB, said the rules make a major failure less likely because banks’ creditors know they’ll face losses in a collapse.

----The FSB rules separate the liabilities needed to keep a bank running from purely financial debts such as notes issued for funding. By “bailing in” the bonds -- writing them down or converting them to equity -- regulators aim to ensure a lender in difficulty has the resources to be recapitalized without using public money, and to allow the resolved firm to continue to operate. In a departure from previous practice, senior debt issued by banks is explicitly exposed to loss.

But plan A may already be moot. Despite our disconnected stock market gambling dens, we already seem to be on the cusp of the next global recession. Emerging market economies and a whole fleet of indebted commodities behemoths are about to sink without trace. The scattered survivors face a decade of struggling to return from the arriving hurricane of ruination.

World flirts with global recession as trade growth slows, warns OECD

OECD trims global growth forecasts amid a "deeply concerning" slowdown in global trade and slower growth in emerging markets as economists urge the Chancellor to rethink cuts

The Organisation for Economic Co-operation and Development (OECD) has urged George Osborne to rethink cuts that will disproportionately hit the poor, as it trimmed its world growth forecasts and warned that trade was slowing to a pace usually associated with a global recession.

As the Chancellor prepares to present his Autumn Statement and Comprehensive Spending Review later this month, the OECD welcomed Mr Osborne's decision to smooth out the pace of austerity across the next five years with a "commendable reduction in the downward pressure on public services".
Mr Osborne is currently scrambling to find new ways to save £4.4bn after the House of Lords rejected legislation to slash working tax credits.

----It came as the Paris-based think-tank trimmed its forecast for global growth to 2.9pc this year.
This represents the slowest pace of expansion since 2009 and is down from its previous projection of 3pc.
Growth in 2016 is expected to rise to 3.3pc, although this is weaker than the 3.6pc growth the OECD predicted just two months ago. Trade growth was expected to reach just 2pc this year, with China's slowdown "at the heart" of subdued forecasts.
Catherine Mann, the OECD's chief economist, said the weakening in global trade was "deeply concerning".
----Ms Mann highlighted that there had been just five years in the past 50 in which global trade grew by 2pc or less.
"The[se] rates, have, in the past, been associated with global recession," she said.

Asian shares slide to one-month low on Fed, global growth concerns

Tue Nov 10, 2015 12:07am EST
Asian shares slipped to one-month lows on Tuesday as the spectre of higher borrowing costs in the United States and slower global economic growth haunted riskier assets.

Spreadbetters expected a subdued start for Europe in the wake of Asia's sluggish performance, forecasting a mildly higher open for Britain's FTSE .FTSE, Germany's DAX .GDAXI and France's CAC .FCHI.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 1 percent. South Korea's Kospi .KS11 dropped 1.6 percent and Hong Kong's Hang Seng .HSI shed 1.2 percent.

Japan's Nikkei .N225 fell 0.3 percent from a 2 1/2-month high hit on Monday, though it did manage to trim earlier losses.

"Share prices recovered quite a lot (last month). The rally is coming to a end for now as markets try to price in a Fed rate hike in December," said Takeru Ogihara, chief strategist at Mizuho Trust Securities in Tokyo.

Data on Tuesday showed China's consumer inflation moderated more than expected in October, flagging persistent deflationary pressure in the world's second-largest economy.

The numbers followed disappointing Chinese trade figures over the weekend.

We end for the day with more on the Great German fraud of Volkswagen. In America, VW proffers its duped Muppets a pittance of a bung. Has anyone in Wolfsburg ever been to America to see how little $1,000 buys. What about offering the Muppets free surgeons face masks for life, to cover the shame, embarrassment, and loathing when pulling up anywhere in a dirty, killer, VW diesel. What about buying the vehicles back and removing them from polluting America and injuring or killing Americans? No one in Wolfsburg seem to have a clue. A fire sale of Volkswagen seems to be coming next.

VW Giving $1,000 in Cards, Credits to Owners Caught in Scandal

November 9, 2015 — 3:48 PM GMT
Volkswagen AG announced Monday that owners of cars affected by the diesel-emissions scandal will receive $1,000 in payments as a goodwill gesture.

VW is offering owners of diesel-powered cars with 2.0-liter engines under investigation by the U.S. Environmental Protection Agency $500 on a prepaid Visa card, $500 in dealership credits and three years of free roadside assistance.

The Wolfsburg, Germany-based automaker announced the program in an e-mail today.

VW Struggles to Keep Dealers Happy as Scandal Widens Worldwide

November 9, 2015 — 9:02 PM GMT
Volkswagen AG’s goodwill offer of $1,000 to the owners of cars caught in the emissions scandal comes as the company wages a behind-the-scenes effort to soothe another powerful constituency: its U.S. dealers.

The German company is offering cash and no-interest loans to its roughly 650 dealerships that are stuck with cars that can’t be sold but are taking up precious space in their lots. It is also encouraging dealers to offer pre-scandal prices on trade-ins and promising to make up the difference in value.

“They have to keep those dealers on board, afloat and as happy as they can, because the dealers are going to be on the front line whenever there’s a fix for this problem,” said Michelle Krebs, an analyst with Autotrader.com, an online auto dealer marketplace. “Dealers are absolutely critical when these bad things happen.”

And plenty of bad things have happened to VW, starting with the acknowledgment in September that it sold nearly 500,000 cars in the U.S. marketed as "clean diesel" but in fact pumped up to 40 times the legal limit of nitrogen oxide into the atmosphere. Since then the number of cars under investigation worldwide has grown, prosecutors in Europe and the U.S. have opened probes and its stock has tumbled. Last week, U.S. regulators said that some newer models may be involved and VW itself admitted an additional problem with 800,000 cars, including some gasoline models.

The automaker has responded with extra incentives for both dealers and consumers for the gasoline-powered 2016 models that are still on sale. The discounts have averaged $4,192 on VW cars -- a 52 percent increase -- and $2,248 -- or 70 percent higher -- for Audi sport utility vehicles, according to AutoData Corp.

"When it becomes serious, you have to lie"

Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.

At the Comex silver depositories Monday final figures were: Registered 43.06 Moz, Eligible 118.25 Moz, Total 161.31 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, suspicion grows that the big US banks rig and game the US Treasury market. They wouldn’t do that would they?
I can resist anything except temptation.
Ebenezer Squid, with apologies to Oscar Wilde.

U.S. Probes Treasuries Niche That Some Investors Claim Is Rigged

November 9, 2015 — 10:00 AM GMT
U.S. officials investigating the $12.8 trillion market for U.S. Treasuries are zeroing in on a practice of trading the debt before it’s issued, said a person familiar with the matter -- spotlighting trades that several recent lawsuits allege are part of big banks’ efforts to rig Treasury markets.

Goldman Sachs Group Inc. tipped the government’s avenue of inquiry in a recent regulatory filing. In a standard passage about areas under regulatory scrutiny, the bank’s Nov. 2 disclosure included a handful of words that hadn’t appeared the previous quarter: “offering,” “auction” and “when-issued trading.” It was a reference, the person said, to a fresh line of exploration in the government’s broader, months-old investigation into Treasuries trading.

That shows officials’ interest in one of the least transparent corners of the world’s largest debt market. When-issued securities act as placeholders for bills, notes or bonds before they’re auctioned. The instruments change hands over the counter, with lifespans of just days. There’s scant public information on trading volumes or the market’s biggest players.

The U.S. Justice Department’s fraud section asked last month about when-issued securities as part of broader requests for documents it sent to most or all of the 22 primary dealers in U.S. Treasuries, according to the person familiar with the matter, who requested not to be identified discussing the ongoing probe. The Securities and Exchange Commission is also investigating Treasuries trading, this person said. The SEC and Justice Department declined to comment.

Authorities haven’t accused any of the banks of wrongdoing, and their inquiries remain in early stages. Yet investors, in recent lawsuits, have already provided one potential road map for investigators.

Traders at global banks colluded to artificially inflate the price of instruments that allow them to sell U.S. debt before they own it, and then bought the debt at auctions for an artificially suppressed price, unfairly profiting at investors’ expense, according to several lawsuits filed against the banks beginning in July. The banks haven’t responded to those allegations in court.

There’s no indication that Goldman Sachs, while out front with its disclosure, is under specific government scrutiny. A spokesman for the bank declined to comment on the probe or suits.

----When prices move against dealers, trades in when-issued Treasuries can be unprofitable. On the other hand, a dealer that sells its customer a commitment to deliver U.S. debt at one price -- and then pays a lower price for that debt at auction -- can capture the difference when it delivers the Treasuries at the higher price it locked in.
When debt sells for less than when-issued prices indicate, traders say the auction "tailed."  Auctions tailed more than half the time in every type of security except for the 10-year note between 2010 and 2014, a Cleveland pension fund alleged in a lawsuit against the 22 primary dealers filed Aug. 26 in Manhattan federal court. The chances that a supposedly predictive market would be so consistently off, in a direction that favors the people selling the security, is lower than 1 percent, the fund alleged.

“Call it the Goldman Sachs test. If this is something Goldman would do to its clients, don't do it."
Felix Salmon.

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?

Graphene could take night-vision technology beyond 'Predator'

Date: November 4, 2015

Source: American Chemical Society

Summary: Movies such as 1987's 'Predator,' in which an alien who sees in the infrared hunts down Arnold Schwarzenegger and his team, introduced a generation of sci-fi fans to thermal imaging. Since then, heat-sensing devices have found many real-word applications but have remained relatively expensive and rigid. But a new development featuring graphene could lead to a flexible, transparent and low-cost infrared vision system.
Movies such as 1987's "Predator," in which an alien who sees in the infrared hunts down Arnold Schwarzenegger and his team, introduced a generation of sci-fi fans to thermal imaging. Since then, heat-sensing devices have found many real-word applications but have remained relatively expensive and rigid. But a new development featuring graphene, reported in ACS' journal Nano Letters, could lead to a flexible, transparent and low-cost infrared vision system.
The concept of humans -- or aliens -- having the power to see in the infrared to help fight enemies in the dark has been around for decades. Technology has allowed real-life military, police, firefighters and others to do their jobs successfully at night and in smoky conditions. It also helps manufacturers and building inspectors identify overheating equipment or circuits. But currently, many of these systems require cryogenic cooling to filter out background radiation, or "noise," and create a reliable image. This approach, however, complicates the design of these imaging devices, and adds to the cost and the unit's bulkiness. Tomás Palacios, Pablo Jarillo-Herrero and colleagues wanted to find a more practical solution.
The researchers integrated graphene with silicon microelectromechanical systems (known as MEMS) to make their device. Testing showed it could be used to detect a person's heat signature at room temperature without cryogenic cooling. In the future, advances could make the device even more versatile. The researchers say that a thermal sensor could be based on a single layer of graphene, which would make it transparent and flexible. Also, manufacturing could be simplified, which would bring costs down.

We are all in the gutter, but some of us are looking at the stars.

Oscar Wilde.

The monthly Coppock Indicators finished October

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

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