Thursday, 17 December 2015

Fed Day Plus One – The Scripted Response.

Baltic Dry Index. 471  -13.      Brent Crude 37.17

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

"When I use a word," Humpty Yellen said, in rather a scornful tone, "it means just what I choose it to mean—neither more nor less."

Humpty Yellen, with apologies to Charles Dodgson.

In the longest running, most telegraphed, interest rate change of our new century, the talking chair and her gang of Fedster’s, moved from zero to a quarter of a percent, to a quarter of a percent to a half percent. How scripted Wall Street cheered and whistled and screamed for more! All news was back to being good news again. Higher interest rates put the Santa Claus stock rally back on the table again. 2015 may yet get into the league of positive stock market advances. Nothing scripted about this of course. The Fed’s tag team of cronies and the Plunge Protection Team sallied out in a two day campaign of stock buying. The Shanghai stock market comes to mind.

The great bond bull market 1981- 2015 is over, but don’t tell the Great Vampire Squids drinking the Fed’s Kool-Aid. And look away from the Baltic Dry (shipping) Index and commodities, something very bad is unfolding back in the real world.

Fed Ends Zero-Rate Era; Signals 4 Quarter-Point Increases in 2016

December 16, 2015 — 7:00 PM GMT Updated on December 16, 2015 — 9:40 PM GMT
The Federal Reserve raised interest rates for the first time in almost a decade, a widely telegraphed move that Chair Janet Yellen said would be followed by “gradual” tightening as officials watch for evidence of higher inflation.

The Federal Open Market Committee unanimously voted to set the new target range for the federal funds rate at 0.25 percent to 0.5 percent, up from zero to 0.25 percent. Policy makers separately forecast an appropriate rate of 1.375 percent at the end of 2016, the same as September, implying four quarter-point increases in the target range next year, based on the median number from 17 officials.
“The economic recovery has clearly come a long way, although it is not yet complete,” Yellen told a press conference following the conclusion of the FOMC’s two-day meeting in Washington. “The committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen.”
The increase draws to a close an unprecedented period of record-low rates that were part of extraordinary and controversial Fed policies designed to stimulate the U.S. economy in the wake of the most devastating financial crisis since the Great Depression. The FOMC lowered its benchmark rate to near zero in December 2008, three months after the collapse of investment bank Lehman Brothers Holdings Inc. and 10 months before unemployment in the U.S. peaked at 10 percent.

"The one phrase that I think is notable is that the committee is confident that inflation will rise, and that was the key criterion that changed," said Guy LeBas, managing director and chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia.

The Standard & Poor’s 500 Index of U.S. stocks jumped 1.5 percent to 2,073.07 in New York, rising for three consecutive days for the first time since October while erasing losses for the year.

We close Fed day plus 1, with China and more on the story of China’s fake economic figures. Still in this day and age, does anyone still believe Uncle Scam’s or Chancellor Osbornes? Maybe one day the Fed’s talking chair will be forced to admit, “we have no idea what’s real or not anymore.  We just curve fit the numbers to where we want the world to think we are. This is quite legal on the Great Nixonian Error of fiat money. I mean it’s not like its real money or anything. It’s just electrons!”

Officials admit to faking economic figures

By ZHENG YANGPENG (China Daily) Updated: 2015-12-14 07:27
Several local officials in China's Northeast region sought to explain dramatic economic drops in their areas by admitting they had faked economic data in the past few years to show high growth when the real numbers were much lower, Xinhua News Agency reported on Friday.
"If the past data had not been inflated, the current growth figures would not show such a precipitous fall," one official was quoted as saying.
The report cited several officials in the region who acknowledged they had significantly overstated data ranging from fiscal revenue and household income to GDP.
Three years ago Liaoning province's GDP growth was reported at 9.5 percent, but its current figureover the first three quarters of this yearis just 2.7 percent. Jilin's growth was reported at 12 percent three years ago, but its current rate is 6.3 percent in the same period.
The revelation about the inflated figures came as the GDP growth of the three Northeast provinces ranked the lowest nationwide.
Guan Yingmin, an official in Heilongjiang province, said local investment figures were inflated by at least 20 percent, which translates to nearly 100 billion yuan ($15.7 billion).
If the local financial reports were true, some single counties' GDP would have surpassed Hong Kong. An earlier audit by the National Audit Office found one county in Liaoning that reported annual fiscal revenues 127 percent higher than the actual number.
A staff member in the Jilin provincial finance department, who asked not to be identified, told China Daily that in past years, local officials competed each other to lure external investment projects. They reported the promised investment value, whether it had been achieved or not, as the investment figure.
The legacy of the command economy in the area means that there is a lack of entrepreneurship and forward thinking, said Xu Mengbo, an economics professor at Jilin University.
"In terms of management ideas, there is at least 10-year gap," he said.

U.S. Economy Grinds To Halt As Nation Realizes Money Just A Symbolic, Mutually Shared Illusion

WASHINGTON—The U.S. economy ceased to function this week after unexpected existential remarks by Federal Reserve chairman Ben Bernanke shocked Americans into realizing that money is, in fact, just a meaningless and intangible social construct.
What began as a routine report before the Senate Finance Committee Tuesday ended with Bernanke passionately disavowing the entire concept of currency, and negating in an instant the very foundation of the world's largest economy.
"Though raising interest rates is unlikely at the moment, the Fed will of course act appropriately if we…if we…" said Bernanke, who then paused for a moment, looked down at his prepared statement, and shook his head in utter disbelief. "You know what? It doesn't matter. None of this—this so-called 'money'—really matters at all."
"It's just an illusion," a wide-eyed Bernanke added as he removed bills from his wallet and slowly spread them out before him. "Just look at it: Meaningless pieces of paper with numbers printed on them. Worthless."
According to witnesses, Finance Committee members sat in thunderstruck silence for several moments until Sen. Orrin Hatch (R-UT) finally shouted out, "Oh my God, he's right. It's all a mirage. All of it—the money, our whole economy—it's all a lie!"
Screams then filled the Senate Chamber as lawmakers and members of the press ran for the exits, leaving in their wake aisles littered with the remains of torn currency.
As news of the nation's collectively held delusion spread, the economy ground to a halt, with dumbfounded citizens everywhere walking out on their jobs as they contemplated the little green drawings of buildings and dead white men they once used to measure their adequacy and importance as human beings.
At the New York Stock Exchange, Wednesday morning's opening bell echoed across a silent floor as the few traders who arrived for work out of habit looked up blankly at the meaningless scrolling numbers on the flashing screens above.

“Would you tell me, please, which way I ought to go from here?”
“That depends a good deal on where you want to get to,” said the BIS
“I don’t much care where–” said Yellen.
“Then it doesn’t matter which way you go,” said the BIS.
“–so long as I get SOMEWHERE,” Yellen added as an explanation.
“Oh, you’re sure to do that,” said the BIS, “if you only print long enough.”

With apologies to Alice.

Below Luigi Boccherini covers the rise and fall of the American Empire in about 1780, before retiring in disgrace to the obscure and remote castle town of Arenas de San Pedro, Spain. Back then it didn’t pay to thwart the King, rather like King Dollar now.

At the Comex silver depositories Wednesday final figures were: Registered 39.81 Moz, Eligible 119.09 Moz, Total 158.90 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, sinking shipping lines try to figure out how to comply with Paris 2015. With Baltic Dry Index collapsing making new all-time daily lows, they may be sunk into bankruptcy long before they get the chance to try.

Shipping Industry Split on Emissions Fix

International shipping companies, left out of the Paris climate agreement, have yet to agree on a target to reduce the industry’s carbon emissions

Dec. 14, 2015 3:41 p.m. ET
Shipping groups remain divided over how to reduce carbon emissions after being left out of the climate-change pact reached over the weekend in Paris.

The landmark agreement between more than 190 nations sets targets to curb the release of greenhouse gases and sets a target global temperature. But adherence to the voluntary pact will be measured within each country’s borders, leaving out the ships and aircraft that carry goods around the world.

The International Maritime Organization, the shipping industry’s main regulatory body, says carriers will contribute to global carbon-reduction but stopped short of committing to formal targets. That doesn’t go far enough for some in the industry, who say carriers may face a series of varying regional regulations without a common global standard. International shipping accounts for 2.2% of man-made CO2 emissions, according to the IMO.

“We are operating in a global industry that calls for a global solution,” said John Kornerup Bang, chief advisor on climate change at A.P. Moller-Maersk A/S, the parent of Maersk Line, the world’s largest container shipping line. “The last thing we want to see is a series of regional regulations. The effects will not be level and they will not be effective because it is so easy in this business to move fleets around.”
The IMO, a United Nations agency that sets rules for international maritime operations, has adopted mandatory energy efficiency standards for new ships and standards for measuring ship emissions. Those actions don’t address overall emissions, however, the result of an impasse between larger, developed nations and countries with emerging economies, industry officials say.
Mr. Bang in an interview said the IMO is hamstrung by the process in which rules are negotiated by member countries. He praised the Paris agreement but said the carrier was disappointed the final draft did not urge international transport to address the issue.
---- The International Chamber of Shipping, a London-based trade group representing ship owners, said it will press for an agreement on carbon-reduction targets at an April 2016 meeting the IMO has scheduled on the issue.
“Unilateral or regional regulation would be disastrous for shipping and disastrous for global CO2 reduction, whereas IMO is already helping shipping to deliver substantial CO2 reductions on a global basis,” ICS Secretary General Peter Hinchliffe said in a statement.
A recent European Parliament report estimated between 3% and 4% of global, man-made CO2 emissions came from international commercial flights and shipping.

After launching into an extended 45-minute diatribe about short sighted moves by "those bastards in Congress" that could potentially exacerbate the nation's already deeply troublesome budget imbalance, the Federal Reserve chairman reportedly bought a round of tequila shots for two customers he had just met who were seated on either side of him, announcing, "I love these guys."

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 nanoribbons get metallic

Date: December 15, 2015

Source: Aalto University

Summary: Researchers have succeeded in experimentally realizing metallic graphene nanoribbons (GNRs) that are only 5 carbon atoms wide. In their article, the research team demonstrated fabrication of the GNRs and measured their electronic structure. The results suggest that these extremely narrow and single-atom-thick ribbons could be used as metallic interconnects in future microprocessors.
Researchers at Aalto University have succeeded in experimentally realizing metallic graphene nanoribbons (GNRs) that are only 5 carbon atoms wide. In their article published in Nature Communications, the research team demonstrated fabrication of the GNRs and measured their electronic structure. The results suggest that these extremely narrow and single-atom-thick ribbons could be used as metallic interconnects in future microprocessors.
Graphene nanoribbons have been suggested as ideal wires for use in future nanoelectronics: when the size of the wire is reduced to the atomic scale, graphene is expected to outperform copper in terms of conductance and resistance to electromigration, which is the typical breakdown mechanism in thin metallic wires. 
However, all demonstrated graphene nanoribbons have been semiconducting, which hampers their use as interconnects. Headed by Prof. Peter Liljeroth, researchers from the Atomic Scale Physics and Surface Science groups have now shown experimentally that certain atomically precise graphene nanoribbon widths are nearly metallic, in accordance with earlier predictions based on theoretical calculations.
The team used state-of-the-art scanning tunneling microscopy (STM) that allows them to probe the material's structure and properties with atomic resolution. "With this technique, we measured the properties of individual ribbons and showed that ribbons longer than 5 nanometers exhibit metallic behaviour," says Dr Amina Kimouche, the lead author of the study.
The nanoribbon fabrication is based on a chemical reaction on a surface. "The cool thing about the fabrication procedure is that the precursor molecule exactly determines the width of the ribbon. If you want one-carbon-atom-wide ribbons, you simply have to pick a different molecule," explains Dr Pekka Joensuu, who oversaw the synthesis of the precursor molecules for the ribbons.
The experimental findings were complemented by theoretical calculations by the Quantum Many-Body Physics group headed by Dr Ari Harju. The theory predicts that when the width of the ribbons is increased atom-by-atom, every third width should be (nearly) metallic with a very small band gap. "According to quantum mechanics, normally when you make your system smaller, it increases the band gap. Graphene can work differently due to its extraordinary electronic properties," says Harju's doctoral student Mikko Ervasti, who performed the calculations.
These results pave the way for using graphene in future electronic devices, where these ultra-narrow ribbons could replace copper as the interconnect material.

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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