Baltic Dry Index. 477 +06 Brent Crude 36.28
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Christmas is coming and the geese are getting fat, Please put a billion in the bankster’s hat, If you haven’t got a billion, a million will do, If you haven’t got a million, then God damn you!
Ebenezer Squid.
For more on the inspiration to securities fraudsters everywhere, scroll down to Crooks Corner and one Martin Shkreli.
We open for the week with yet more trouble in the oil sector. No one is cutting back production, despite an oil glut estimated to be running at 2 mbpd over consumption. Later next year Iran will join the party adding yet more excess barrels of crude to the glut. Oil in the twenties seems only weeks away.
Siberian Surprise: Russian Oil Patch Just Keeps Pumping
December 20, 2015 — 9:01 PM GMT
In the fight for market share among the world’s oil producers this year,
Russia wasn’t supposed to be a contender.
But the world’s No. 3 producer has been pumping at the fastest pace
since the collapse of the Soviet Union, adding to the flood on an already-swamped
market and helping push prices to the lowest levels since 2009.
Russia’s unexpected oil bounty this year is the result not of a new
Kremlin campaign but of dozens of modest productivity improvements across the
sprawling sector. Even pressured by plunging prices, as well as U.S. and
European Union sanctions that cut access to much foreign financing and
technology, Russian companies have managed to squeeze more crude out of some of
the country’s oldest fields. They have also brought new projects on line,
offsetting steady declines in its core producing region of West Siberia.
With a rise of 0.5 percent in the first nine months of 2015, Russia
hasn’t boosted production as much as its larger rivals, the U.S. (up 1.3
percent) and Saudi Arabia (up 5.8 percent), according to Citigroup
Inc. But having ignored OPEC’s calls earlier this year to join efforts to
support prices by pumping less, Russia is keeping up with the cartel.
“I know of no one who had predicted that Russian production would rise in 2015, let alone to new record levels,” said Edward Morse, Citigroup’s global head of commodities research. As recently as April, not even the Russian government thought 2015 would break the record.
More
http://www.bloomberg.com/news/articles/2015-12-20/siberian-surprise-russian-oil-patch-just-keeps-pumping
Saudi Crude Exports Rose in October to Most in Four Months
December 20,
2015 — 8:06 AM GMT Updated on December 20, 2015 — 9:01 AM GMT
Saudi Arabia boosted crude exports in October to the highest level in
four months, as the world’s biggest oil exporter added barrels to a worldwide
supply glut that has contributed to a slump in prices.
Saudi shipments rose to 7.364 million barrels a day in the month from
7.111 million in September, according to the latest figures from the Joint
Organisations Data Initiative. The monthly exports were the most since June and
7 percent higher than in October 2014, the data released on Sunday showed. JODI
is an industry group supervised by the Riyadh-based International Energy Forum.
Saudi Arabia produced 10.28 million barrels a day in October, up from
10.23 million in September, the JODI figures showed.
Morehttp://www.bloomberg.com/news/articles/2015-12-20/saudi-crude-exports-rose-in-october-to-highest-in-four-months
Oil Drops to 6-Year Low as Rising Rig Count Seen Adding to Glut
December 17,
2015 — 11:44 PM GMT Updated on December 18, 2015 — 8:22 PM GMT
Crude slid to the lowest level in more than six years in New York as a
rising number of oil rigs in the U.S. signaled the supply glut will be
prolonged.Futures capped a third weekly drop after Baker Hughes Inc. reported that the number of active oil rigs in the U.S. climbed by 17 this week to 541. U.S. crude supplies surged to 490.7 million barrels, the most for this time of year since 1930, according to the Energy Information Administration. Goldman Sachs Group Inc. warned of “high risks” that prices may sink further as stockpiles swell.
Oil is trading at levels last seen during the global financial
crisis on signs the surplus will be exacerbated. The Organization of
Petroleum Exporting Countries abandoned output limits at a Dec. 4 meeting while
the U.S. Federal Reserve increased interest rates this week, boosting the
dollar and reducing the appeal of commodities traded in the U.S. currency. Both
houses of Congress approved on Friday a $1.1 trillion spending measure
that would end a 40-year-old ban on most crude exports.
“This is a huge glut and there’s no relief in sight," Stephen
Schork, president of the Schork Group Inc. in Villanova, Pennsylvania, said by
phone. "We got within $1.89 of the 2009 low of $32.40 today. That’s got to
be the target now and we’ll probably soon test it."
West Texas Intermediate for January delivery fell 22 cents, or 0.6
percent, to close at $34.73 a barrel on the New York Mercantile
Exchange. It was the lowest settlement since February 2009. The
volume of all futures traded was 16 percent above the 100-day average at 2:45
p.m. Prices have dropped 35 percent this year and are heading for a second
annual decline
Brent crude for February settlement dropped 18 cents, or 0.5 percent, to
$36.88 a barrel on the London-based ICE Futures Europe exchange. It
was the lowest close since December 2008. The European benchmark oil closed at
a 82-cent premium to the February WTI contract.
Morehttp://www.bloomberg.com/news/articles/2015-12-17/oil-set-for-third-weekly-loss-as-supply-glut-seen-relentless
In other commodities news, Moly leads in the unfolding commodities depression.
This Year's Worst Commodity Is One You Probably Can't Pronounce
December 18,
2015 — 12:00 AM GMT Updated on December 18, 2015 — 9:53 AM GMT
An obscure metal used to make steel has become this
year’s worst-performing commodity, after China’s stumbling economy and a
collapse in the energy industry drove outsized losses.Molybdenum -- that’s mo.lyb.de.num for the uninitiated -- is used in many steel building materials and to help harden the drills used to extract oil and natural gas from deep underground. Prices plunged 49 percent, the most among 79 raw materials tracked by Bloomberg, as the white metal was undermined by the flagging demand and oversupply that plagued global commodity markets throughout 2015.
Use of the metal tumbled 5.1 percent this year, the biggest contraction since 2009, driven by a slowdown in China, the world’s biggest metals and energy consumer, according to Macquarie Group Ltd. Prices have dropped for eight straight months, the longest slump since 2011, weighing on returns for mining companies including Freeport-McMoRan Inc., the world’s top producer.
“It’s like a poster child for the commodity bear market,” said Paul Christopher, a St. Louis-based head global market strategist for Wells Fargo Investment Institute, which oversees $1.7 trillion. “We don’t have a positive outlook on metals, including molybdenum, because they’ve been overproduced. They will continue to do the worst, not just because China’s demand is slipping still, but also because there’s not been enough supply adjustment.”
Prices for molybdenum oxide tumbled to a 12-year low of $4.616 a pound in November, according to monthly data from Metal Bulletin. The drop exceeded the 34 percent decline for crude oil and the 26 percent slide in the Bloomberg Commodity Index, a gauge of returns from 22 items that is headed for its biggest annual decline since the recession in 2008. Molybdenum for immediate delivery traded on the London Metal Exchange slumped 43 percent this year to $11,628 a metric ton ($5.27 a pound).
About half of molybdenum is produced as a byproduct of extracting other metals, mainly copper. Because it makes up a small portion of revenue for mining companies, suppliers are slower to respond with output cuts when prices tumble, said Mu Li, an analyst at commodity researcher CPM Group in New York. Production topped demand by 40.9 million pounds in 2015, the biggest surplus since at least 2002, according to Bank of America Corp. The market will remain oversupplied through 2020, the bank estimates.
More
http://www.bloomberg.com/news/articles/2015-12-18/this-year-s-worst-commodity-is-one-you-probably-can-t-pronounce
International Energy Agency sees 'peak coal' as demand for fossil fuel crumbles in China
'The golden age of coal seems to be over. Given the dramatic fall in the cost of solar and wind, the question is whether coal prices will ever recover'
China’s coal consumption has been falling for two years and may never recover as the moment of "peak coal" draws closer, the International Energy Agency (IEA) has said.The energy watchdog has slashed its 2020 forecast for global coal demand by 500m tonnes, warning that the industry risks unstoppable decline as renewable technologies and tougher climate laws shatter previous assumptions.
In poignant symbolism, the peak coal report came as miners worked their final shift at Britain’s last surviving deep coal mine at Kellingley in North Yorkshire, closing the chapter on the British industrial revolution.
Mines around the world are at increasing risk as prices slump to 12-year lows of $38 a tonne, and the super-cycle gives way to a pervasive glut. The IEA said the $40bn Galilee Basin project in Australia may never become operational. There is simply not enough demand, even for cheap, open-cast coal.
“The golden age of coal seems to be over,” said the IEA’s medium-term
market report. “Given the dramatic fall in the cost of solar and wind
generation and the stronger climate policies that are anticipated, the question
is whether coal prices will ever recover.”
“The coal industry is facing huge pressures, and the main reason is
China,” said Fatih Birol, the agency’s director.
The IEA reported that China’s coal demand fell by 2.9pc in 2014 and the
slide has accelerated this year as the steel and cement bubble bursts. The
country produced more cement between 2011 and 2013 than the US in the entire
20th century, according to one study. This will never happen again.
Morehttp://www.telegraph.co.uk/finance/economics/12058456/IEA-sees-peak-coal-as-demand-crumbles-in-China.html
We close with the universal disaster known as the EUSSR. Will Euroland survive 2016? Below Spain becomes a 4 way play.
Splintered Spanish vote heralds arduous coalition talks
A historically fragmented vote in Spanish elections on Sunday heralded
weeks of talks to form a coalition government, with neither Prime Minister
Mariano Rajoy's conservatives nor left-wing parties winning a clear mandate to
govern.
Despite garnering the most votes, the center-right People's Party (PP)
had its worst result ever in a general election as Spaniards angered by
high-level corruption cases and soaring unemployment turned away from the party
in droves.
The outcome was reminiscent of a similar situation in neighboring
Portugal, where the incumbent conservatives won an October election but a
socialist government backed by far left parties was ultimately sworn in.
An unexpected surge from upstart anti-austerity party Podemos, which now
partly holds the key to power, is the latest example of rising populist forces
in Europe at the expense of mainstream center-right and center-left parties.
In Spain, the fragmented vote heralded a new era of pact-making,
shattering a two-party system that has dominated Spain since the 1970s and
casting a pall over an economic reform program that has helped pull the country
out of recession.
Morehttp://www.reuters.com/article/us-spain-election-idUSKBN0U30BH20151221
True, governments can reduce the rate of interest in the short run, issue additional paper currency, open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression.
Ludwig
von Mises.
At the Comex silver depositories Friday
final figures were: Registered 39.84 Moz, Eligible 118.42 Moz, Total 158.26
Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally doubled
over.
With the caveat that everyone is innocent until
convicted in a court of law, we open Christmas week with the latest scandal to
rock Wall Street. Below Bloomberg covers yet another alleged Ponzi scheme. But
with the Fedster’s stealing from thifty savers via ZIRP, to reward the
reckless, feckless, gamblers on Wall Street,
Ponzi schemes now seem to be all the rage. Just check out how US
frackers operate. Now that price of crude has collapsed, a massive round of
Ponzis will blow up in 2016. Up first though, Mr. Shkreli, the poster bad boy
of US Pharma. And to think that he accomplished all this without the help of a
single Goldmanite.
Below, Wall Street at its best. Separating the
Muppets from their cash.
There’s a rich fool born every
minute.
Ebenezer Squid.
Martin Shkreli Accused of Being Surprisingly Good at Fraud
Dec 17, 2015 4:42 PM
EST
By Matt Levine
There is a fairly standard trajectory for a lot of securities
frauds. A brash youngster comes along and thinks he will be good at
trading. He raises money from people who also think he will be good at trading.
Maybe he lies to them a bit -- about how good he already is at trading, or
about how much money he's already raised -- or maybe, at this stage,
everything is completely on the up and up. In any case, he gets the money
and starts trading. Then he starts losing. This is bad. It's bad for his bottom
line, of course -- he's getting paid to invest his investors' money
well, not badly -- but more importantly, it is bad for his self-conception. In
his own mind, he is a winner; he is supposed to be good at trading. It is
unbearable to him that he isn't.So he starts lying, telling investors that everything is great and he's making money for them hand over fist. This is a hard lie to sustain, since eventually the investors will want their money back, and he's promising them more and more of it. There are only two real ways to sustain the lie. One is to Ponzi it up, and keep raising new money from investors to pay out the old ones. In the right environment, and with the right sales pitch, this can work really well for a really long time, but since the supply of suckers is finite, it can only ever end in prison or the grave.
The other way to sustain the lie -- and the only possible permanent solution -- is to gamble on redemption. If you've lost half of your investors' money, but you've told them that you've doubled it, then you need to quadruple the money you have left. So you take riskier and riskier bets, hoping that one will eventually pay off and make up for all of the earlier losses. This basically never works! But it could work. And if it does, your investors will be happy, you will be rich, and no one will ever be the wiser.
Of course, these methods aren't mutually exclusive, and you can Ponzi along for a bit while looking for the big score that will return you to legitimacy.
Here are the criminal indictment and Securities and Exchange Commission complaint against Martin Shkreli, who was arrested today not for jacking up prices for lifesaving drugs, not for buying the only copy of a Wu-Tang Clan album and not listening to it, not for being generally vile on Twitter and in interviews, but just for garden-variety securities fraud. Here's how the indictment describes the early going at Shkreli's second hedge fund, MSMB Capital :
SHKRELI told Investor 1 that MSMB Capital had $35 million in assets under management and that the fund's independent auditor and administrator were Rothstein, Kass & Company, P.C. ("Rothstein Kass") and NAV Consulting Inc. ("NAV Consulting"), respectively. At the time of this representation, MSMB Capital did not have an independent auditor or administrator, and SHKRELI had lost through trading the approximately $700,000 that had been invested by the four Capital Limited Partners. In fact, as of November 30, 2010, the value of assets in MSMB Capital's bank and brokerage accounts totaled approximately $700.
So he was down 99.9 percent. Here I will humbly offer you a very small bit of investing advice: It is hard to come back from being down 99.9 percent. Just making a 99.9 percent return won't do it; if you lose 99.9 percent, you have to make returns of 99,900 percent on the money you've got left just to get back to breaking even. Shkreli didn't want to get back to breaking even. Here's how he allegedly wound up MSMB Capital in September 2012:
----But never mind that. Just do the math. Shkreli raised $3 million for MSMB Capital and $5 million for MSMB Healthcare. He allegedly returned $3.4 million to investors from the settlement agreements, and $7.6 million from the consulting agreements. So his MSMB investors, in aggregate, put in $8 million and got back $11 million. That isn't exactly doubling their money, but it is a profit, which is pretty amazing when you remember that at least some of them were down 99.9 percent at one point. Obviously, prosecutors and the SEC and Retrophin all allege that Shkreli stole that $11 million from Retrophin, which is not at all a nice thing to do. But Retrophin shareholders, over all, are up too. Shkreli started it from scratch; it now has a market capitalization of over $750 million. Here's its stock price since going public:
----He wasn't caught because his scheme, like most such schemes, eventually crashed under its own weight. His scheme worked! He was caught, as far as I can tell, for being so abrasive about everything. How could shareholders not complain; how could prosecutors not go after him? Still, it is quite an accomplishment. If he is a securities fraudster, he should be an inspiration to securities fraudsters everywhere.
More
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?
Scientists create atomically thin boron
Synthesis of borophene expands family of 2-dimensional materials beyond graphene
Date: December 17, 2015
Source: Northwestern University
Summary: A team of scientists has, for the first time,
created a two-dimensional sheet of boron -- a material known as borophene. It
is an unusual material because it shows many metallic properties at the nanoscale
even though three-dimensional, or bulk, boron is nonmetallic and
semiconducting. No bulk form of elemental boron has this metal-like behavior.
Borophene, both metallic and atomically thin, holds promise for possible
applications ranging from electronics to photovoltaics.
A team of scientists from the U.S. Department of Energy's (DOE) Argonne
National Laboratory, Northwestern University and Stony Brook University has,
for the first time, created a two-dimensional sheet of boron -- a material
known as borophene.
Scientists have been interested in two-dimensional materials for their
unique characteristics, particularly involving their electronic properties.
Borophene is an unusual material because it shows many metallic properties at
the nanoscale even though three-dimensional, or bulk, boron is nonmetallic and
semiconducting.
Because borophene is both metallic and atomically thin, it holds promise
for possible applications ranging from electronics to photovoltaics, said
Argonne nanoscientist Nathan Guisinger, who led the experiment. "No bulk
form of elemental boron has this metal-like behavior," he said.
The study will be published Dec. 18 by the journal Science.
Like its periodic table neighbor carbon, which appears in nature in
forms ranging from humble graphite to precious diamond, boron wears a number of
different faces, called allotropes. But that's where the similarities end.
While graphite is composed of stacks of two-dimensional sheets that can be
peeled off one at a time, there is no such analogous process for making
two-dimensional boron.
"Borophenes are extremely intriguing because they are quite
different from previously studied two-dimensional materials," Guisinger
said. "And because they don't appear in nature, the challenge involved
designing an experiment to produce them synthetically in our lab."
Although at least 16 bulk allotropes of boron are known, scientists had
never before been able to make a whole sheet, or monolayer, of borophene.
More
Advance notice. For a variety of
reasons, including cost efficiency, I will be dropping the LIR newsletter from
the start of next year, The (mostly) daily LIR update will still be available
at the blog, where most of the readership now occurs.
The monthly Coppock Indicators finished November
DJIA: +25 Down. NASDAQ:
+121 Down. SP500: +45 Down.
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