Monday, 7 December 2015

China’s Disappearing Act.

Baltic Dry Index. 563 -11       Brent Crude 42.73

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

“If you would know who controls you see who you may not criticise.”


Just how bad are things in China? Well apparently so bad that in China’s ever growing financial services scandal the paranoia is now spreading to the “foreigners” working in the sector. With the big fear, getting “disappeared forever,” paranoia is understandable. It might be time to run. Below, fear rises in China.

Just because you’re paranoid, doesn’t mean someone’s not out to get you.


Foreigners drawn in as fear and loathing grip China's finance industry

Fri Dec 4, 2015 5:56am EST
A widening regulatory probe into some of China's biggest brokerages has set nerves jangling in a financial industry still recovering from a summer of turmoil, with fear of becoming entangled in investigations spreading among foreign investors.
People working at domestic securities firms report an ugly mood after news in the past week of increased scrutiny of the sector by authorities. A nervous inertia is slowing new business as staff are encouraged to report their bosses or colleagues for corruption.
"It's creating a very dog-eat-dog environment," said a partner at a Chinese mutual fund. "People collect evidence on their bosses, because if they get rid of their boss, it means that they can get promoted faster."
Foreigners operating in China or investing in the mainland through Hong Kong are also worried about becoming entangled in the widening regulatory net.
"Everyone is absolutely terrified of China," said a director at an international brokerage in Hong Kong, echoing the sentiment of many in the industry contacted by Reuters. Most did not want to be identified due to the sensitivity of the issue.
The crackdown on the securities industry - from hedge funds and institutional fund managers to brokers and banks - began after the mid-year equity market crash wiped around 40 percent off mainland share prices, which Beijing blamed partly on "malicious" short-selling and insider trading.
Even though domestic stock markets have rebounded steadily by about 25 percent since the pit of the crash in August, market executives say the regulatory atmosphere has not relaxed.
Authorities have revealed little about the specific reasons for the probes, but three sources told Reuters they believed some of the investigations involved suspicions of insider trading relating to trades by China's "national team" - the big brokerages and fund managers dragooned into buying stocks as part of unprecedented measures to prop up the market.
Chinese shares tumbled more than 5 percent last Friday, the biggest one-day drop since the nadir of the summer rout, after Reuters reported the country's fourth-biggest brokerage was under investigation.
---- Haitong, along with Guotai Junan Securities, is also being probed by anti-corruption investigators, state-run news agency Xinhua said. Bloomberg reported on Friday that a former Beijing police chief who put away one of China's top Communist Party officials has been put in charge of the corruption campaign of the securities industry.
"They put a notice on all the floors with the number that you can call anonymously to encourage people to dial in. They say they just want people to report corruption," said a source at Guotai Junan.
---- A lawyer who has assisted foreign firms caught up in the probes said some were introducing new onshore compliance programs, although that did not guarantee keeping out of trouble.
"You can't 'comply' because there is no rule of law," he said. "The best thing you can do is establish processes for who is likely to be taken away, and how to make sure they aren't disappeared forever."

Up next, some very bad news Friday, for GM metal bashers in Detroit. With the price of iron ore, steel and copper collapsing, who can compete in manufacturing against China?

First GM China-made import to U.S. to go on sale in mid-2016

Fri Dec 4, 2015 4:08pm EST
By next summer, the Buick Envision small SUV will become the first General Motors Co (GM.N) model imported from China to be sold in the United States, the company said on Friday.

Reuters reported in August that by 2017 most Buick's U.S. sales could be of models produced in either China or Europe.

The Envision will give Buick three "crossover” vehicles in the U.S. market. In November, crossover vehicles accounted or 40 percent of U.S. auto sales and is the fastest-growing segment of the auto industry.

The four-door, five-passenger compact Envision will fit in the Buick crossover lineup below the Enclave and above the Encore.

The Envision-from-China announcement comes two weeks after GM's U.S. unionized plant workers ratified a new labor contract, but a GM spokesman said the company did not hold off on announcement of the China import because of negotiations with the United Auto Workers.

Next summer's sale of the Envision was reported earlier on Friday by the Automotive News.

In commodities, it a big week coming up for Glencore. As a hybrid mining/trading corporation with massive debts and a convoluted balance sheet, how long can Glencore survive our commodity depression?

Glencore's Credit Rating Under Strain If Copper Remains Down

December 4, 2015 — 12:00 AM GMT Updated on December 4, 2015 — 4:56 PM GMT
When Glencore Plc meets with shareholders next week, one big question on the minds of investors will be how long the company’s credit rating can withstand an ongoing slide in commodity prices.
Copper is 18 percent below the price used by Standard & Poor’s to assess its BBB rating for Glencore, one of the largest commodity traders. While S&P says below-estimate prices don’t mean a downgrade is imminent, the gap highlights how quickly metals prices have fallen and the headache it brings for producers with lots of debt.
“If current spot prices persist over the next couple of years, then that’s going to make it more difficult for the company to keep credit measures in-line with our expectations,” Simon Redmond, an analyst at S&P, said in a phone interview from London. “There could come a copper price at which the current rating becomes unsustainable.”
With the company’s balance sheet bearing $30 billion in debt and no sign of a turnaround in metals, Chief Executive Officer Ivan Glasenberg is under pressure to deliver on a $10 billion debt-reduction package. During the Dec. 10 meeting, executives are expected discuss asset sales, cost cuts and other measures designed to reduce the company’s debt burden, the biggest in the industry.
Copper is having the worst year since the financial crisis of 2008 as prices lost 26 percent amid weakening demand from China. The metal touched a six-year low last week of $2.002 a pound in New York. That’s 20 percent below the $2.50 a pound estimate for 2015 used by Moody’s Investors Service and 21 percent less than S&P’s forecast of $2.55. S&P forecasts copper at $2.40 next year and Moody’s sees $2.35. The metal traded at $2.0795 on Friday.
If copper remains below $2.10 a pound, Glencore will lose its investment-grade rating based on forecasts for 2016, RBC Capital Markets analyst Tyler Broda predicted in a note Thursday.

In other news, money runs from Turkey. Frexit vies with Brexit.

Turkey's Never Had It So Bad as Record Outflows Seen Persisting

December 6, 2015 — 10:00 PM GMT
Foreign investors look set to keep pulling their money out of Turkey after dumping a record amount of stocks and bonds this year.

Investors from abroad withdrew $7.6 billion from assets in 2015, including $1.4 billion in outflows last month as the party that President Recep Tayyip Erdogan helped found swept back into power, initially triggering a rally in the nation’s assets. Declines resumed as the war in neighboring Syria and Russian sanctions threatened the country’s $720 billion economy. 

More selling will probably follow and a rout in the lira, on course for the biggest annual drop since 2008, is set to deepen, according to Capital Economics Ltd. and SEB AB. In addition to Turkey having the biggest current-account deficit as a percentage of output among the Group of 20 nations, concern is mounting that the new government’s overwhelming win in elections last month will allow it to put pressure on the central bank to cut rates with little political opposition.

“Markets have indeed welcomed the recent election, but I think they may be overly sanguine," said William Jackson, senior emerging-markets economist at Capital Economics Ltd. in London. High levels of external debt make it vulnerable to shifts in investor sentiment once the U.S. starts increasing interest rates, weighing on the lira and bonds, he said.

French far-right makes major breakthrough to top regional elections

Sun Dec 6, 2015 5:47pm EST
France's far-right National Front pulled off a historic win on Sunday, topping the vote in the first round of regional elections, in a breakthrough that shakes up the country's political landscape before 2017 presidential elections.

Boosted by fears over the Islamic State attacks that killed 130 people in Paris on Nov. 13, as well as by record unemployment and immigration, Marine Le Pen's party secured 29.4 percent of the vote nationally, the interior ministry said, with over 85 percent of the votes counted.

That is the highest score ever for the anti-Europe, anti-immigration party, which came first in six regions out of 13.

"This is a historic, extraordinary result," FN lawmaker Marion Marechal-Le Pen told TF1 television. "The old system died tonight."

At the Comex silver depositories Friday final figures were: Registered 42.93 Moz, Eligible 114.99 Moz, Total 157.92 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, the reality behind the man-made global warming scam, now rebranded and relaunched as climate change.

Farewell to the man who invented 'climate change’

To this day, global climate policy is still shaped by the agenda of Maurice Strong, a Canadian multimillionaire

A very odd thing happened last weekend. The death was announced of the man who, in the past 40 years, has arguably been more influential on global politics than any other single individual. Yet the world scarcely noticed.

Had it not been for this man, we would not last week have seen 150 heads of government joining 40,000 delegates in Paris for that mammoth climate conference: the 21st such get-together since, in 1992, he masterminded the Rio “Earth Summit”, the largest political gathering in history. Yet few people even know his name.

Some years back, when I was researching for a book called The Real Global Warming Disaster, charting how the late-20th-century panic over climate change came about, few things surprised me more than to discover the absolutely central role played in the whole story by a Canadian socialist multimillionaire, Maurice Strong.

During the Second World War, having emerged from humble origins in the Great Depression, Strong became convinced that the new United Nations should become a world government, dedicated to ensuring that the wealth enjoyed by the richer countries of the West should be spread out around the world’s underprivileged majority.

In the Sixties, having become very rich himself from Canada’s oil industry, Strong came to see that the key to his vision was “environmentalism”, the one cause the UN could harness to make itself a truly powerful world government.

A superb political operator, in 1972 he set up a UN “Environment Conference” in Stockholm, to declare that the Earth’s resources were the common inheritance of all mankind. They should no longer be exploited for the benefit of only a few countries, at the expense of poorer countries across the globe.

To pursue this, he became founding director of a new agency, the UN Environment Programme (UNEP), and in the Eighties he took up the cause of a tiny group of international meteorologists who had come to believe that the world faced catastrophic warming. In 1988, UNEP sponsored this little group into setting up the UN’s Intergovernmental Panel on Climate Change (IPCC).

In 1992, now allied with the IPCC, Strong pulled off his greatest coup when he set up another new body, the UN Framework Convention on Climate Change (UNFCCC), to stage that colossal “Earth Summit” over which he presided in Rio, arranging for it to be attended not only by 108 world leaders and 100,000 others but also by 20,000 UN-funded “green activists”.

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? 

Below, no mention by the BBC of the subsidy.

How can we store more energy from the sun and the wind?

  4 December 2015
Deep in the Nevada desert, thousands of mirrors arrayed in concentric circles face the sky, lit up by the sun.
All this reflected sunshine is directed to the top of a 640 ft (195m) tower standing in their midst.
It's an innovative power plant generating electricity, but not in a way you might expect. And it can carry on doing so even after the sun goes down.
The concentrated light heats up liquid salt pumped to the top of the tower - the temperature reaches 566C (1,050F) - and this heat is then used to make steam to power an electricity generator in another part of the plant.
The issue with solar traditionally is it is an intermittent power source - you can only produce electricity when the sun is shining," explains Kevin Smith, whose company Solar Reserve built the Crescent Dunes plant.
"But because we store the energy as heat, we can reliably produce electricity 24 hours a day, just like a conventional gas fired power station."

The plant is one of a raft of sustainable energy storage solutions trying to address renewable energy's Achilles heel: its variability - ignoring tidal power's constancy.

If we could store the electricity that sun and wind produce, we could tap into those stores when production dips.
And this is the only way we're going to mount an effective challenge to the dominance of fossil fuels, experts say. Yes, tidal power is renewable and constant, but as yet, we haven't found commercially viable ways of tapping into it.
Storage methods currently being used around the world include batteries, flywheels, geothermal plants, compressed air and hydrogen - even ice. But the the most popular method is hydro power - water pumped to the top of a mountain and then released to power turbines at the bottom.
According to research company Navigant, global energy storage installations are going to rise from about 1,750 megawatts (MW) in 2016 to nearly 11,000 MW by 2020.

The monthly Coppock Indicators finished November

DJIA: +25 Down. NASDAQ: +121 Down. SP500: +45 Down. 

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