Baltic Dry Index. 546 -5. Brent Crude 40.44
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
It's easy to buy. Prove that
you bought at the right time and the right price.
Ivan Glasenberg. CEO Glencore.
For more on the IMF ganging up against Russia scroll down to the close of this section. The American War Party seems to have put war in the Ukraine back on the agenda again.
We open with more on China’s hard landing. Forget the official figures, the wreckage is spread out all over the runway. Slamming in right behind China a whole host of high flyers that made up last decade’s high flying China malinvestment display team.
Many people may say that luck
is important, but I think you create your own luck by working hard to ensure
you don't miss opportunities.
Ivan Glasenberg. CEO Glencore.
Stocks fall for 3rd straight session on unrelenting oil rout
Published: Dec 9, 2015 4:32 p.m. ET
U.S. stocks fell for a third-straight day Wednesday, with the S&P 500
joining the Dow industrials in negative territory for the year, as earlier
gains evaporated alongside a turn south in crude-oil prices.The Dow Jones Industrial Average DJIA, -0.43% fell 75.70 points or 0.43%, at 17,492.30. The decline for the blue-chips gauge marks an intraday swing of more than 300 points in a turbulent day for equities, which have been taking their cues from the battered commodities complex.
The S&P 500 index SPX, -0.77% closed down 15.97 points, or 0.8%, to 2,047.62. That pushed the broad stock-market index into negative territory for the year, down 0.6%, joining the Dow industrials, which is showing a 1.9% yearly decline. A fall in the technology sector, off 1.5%, and consumer-discretionary shares, down 1.2%, weighed on the S&P 500.
Tech selling also weighed on the Nasdaq Composite, which took the brunt of the beating COMP, -1.48% closing 75.38 points, or 1.5%, lower at 5,022.87.
An early rebound in oil-and-commodity prices boosted energy-and-materials stocks and helped extend advances for the main indexes earlier Wednesday, following a two-day slump largely driven by oil’s tumble.
But oil futures then turned decidedly lower. A big weekly climb in U.S. distillate supplies dragged prices for heating oil down, undermining the first decline in crude -oil supplies in nearly three months, according to data from the Energy Information Administration. That climb rattled investor confidence as fears of an oil supply-glut resurfaced, and oil futures XLE, +1.31% extended their losing streak to four sessions.
“This is playing into how much lower [oil] will go. There’s a really big oversupply issue here [in crude oil] and, while that’s great for consumers, there are big implications for markets,” said Mark Kepner, equity trading veteran at Themis Trading.
More
http://www.marketwatch.com/story/us-stocks-on-track-for-third-down-day-in-a-row-2015-12-09
Chinese devaluation is a bigger danger than Fed rate rises
The yuan has fallen to the lowest in five years against the dollar. If China devalues in earnest, it will be an earthquake
The world has had a year to brace for monetary lift-off by the US
Federal Reserve. A near certain rate rise next week will come almost as a
relief.
Emerging markets have already endured a dollar shock. The currency has
risen 20pc since July 2014 in expectation of this moment, based on the Fed's
trade-weighted "broad" dollar index.
The tightening of dollar liquidity is what caused a global manufacturing
recession and an emerging market crash earlier this year, made worse by China's
fiscal cliff in January and its erratic, stop-start, efforts to wind down a $26
trillion credit boom. The shake-out has been painful: hopefully the dollar
effect is largely behind us.
The central bank governors of India and Mexico, among others, have been
urging the Fed to stop dithering and get on with it. Presumably they have
thought long and hard about the consequences for their own economies.
----The greater risk for the world over coming months is that China stops trying to hold the line against devaluation, and sends a wave of corrosive deflation through the global economy.
Fear that China may join the world's currency wars is what haunts the
elite banks and funds in London. It is why there has been such a neuralgic
response to the move this week to let the yuan slip to a five-year low of
6.4260 against the dollar.
Bank of America expects the yuan to reach 6.90 next year, setting off a
complex chain reaction and a further downward spiral for oil and commodities.
Daiwa fears a 20pc slide. My own view is that a fall of this magnitude would
set off currency wars across Asia and beyond, replicating the 1998 crisis on a
more dangerous scale.
Lest we forget, China's fixed capital investment has reached $5 trillion
a year, as much as in North America and Europe combined. The excess capacity is
cosmic.
Pressures on China are clearly building up. Capital outflows reached a record $113bn in November. Capital Economics says the central bank (PBOC) probably burned through $57bn of foreign reserves that month defending the yuan peg.
A study by the Reserve Bank of Australia calculates that capital outflows reached $300bn in the third quarter, an annual pace of 10pc of GDP. The PBOC had to liquidate $200bn of foreign assets.
More
http://www.telegraph.co.uk/finance/economics/12040411/Chinese-devaluation-is-a-bigger-danger-than-Fed-rate-rises.html
In commodities news, it increasingly looks like it’s going, going….
We don't need these great big
tier one assets. I'm very happy with getting tier two, tier three assets;
that's what Glencore has been good at.
Ivan Glasenberg. CEO Glencore.
Glencore Plans Bigger Debt Reduction as Commodity Prices Slide
December 10, 2015 — 6:26 AM GMT Updated on December 10, 2015 — 6:39 AM
GMT
Glencore Plc, the Swiss commodities trader, said it will seek to cut its net
debt to as low as $18 billion by the end of next year, accelerating a program
aimed at reducing its liabilities.The company will seek to reduce its debt pile to between $18 billion and $19 billion and also make additional cuts to capital expenditure, lowering spending in 2016 to $3.8 billion from an earlier estimate of $5 billion, it said Thursday in a statement. It had in September set a target to trim debt to the low-$20 billion range, it said in the statement.
“We retain a high degree of flexibility and will continue to review the need to act further as required," Chief Executive Officer Ivan Glasenberg said in the statement before a call with investors. Under measures announced in September, the producer has already scrapped its dividend, raised $2.5 billion in a share sale, signed a $900 million silver streaming deal and started talks on selling a stake in its agricultural unit.
The world’s biggest miners are reeling from a slump in commodities prices that have cut profits and stretched balance sheets loaded with debt during a decade-long bull run.
More
http://www.bloomberg.com/news/articles/2015-12-10/glencore-says-to-accelerate-cuts-to-debt-capital-expenditure
We end for the day with a long forgotten crisis about to heat up again. Remember the botched US coup in the Ukraine and the puppet Quisling president making war on his own people for the benefit of a foreign power? Well the US War Party were just back in Kiev. And the IMF just ganged up against Russia. What could possibly go wrong? War next?
Biden Tells Ukraine to ... Do Nothing
231Vice President Joe Biden's visits to Ukraine always are keenly anticipated: He is considered the voice of the country's Western backers, the senior statesman who can resolve conflicts within the country's ruling elite and push it down the path of reform. This week, however, Biden apparently sent conflicting signals to his Ukrainian hosts.
Visiting Kiev on Monday and Tuesday, Biden made a rousing speech to parliament. His voice ringing with deep emotion, he called on legislators not to waste what could be their "last moment" to turn Ukraine into a free, prosperous country. The speech, however, followed a series of meetings in which the vice president, Assistant Secretary of State Victoria Nuland and U.S. Ambassador Geoffrey Pyatt pushed a cautious line: Keep the much-maligned government in place and stick to the Minsk agreement with Russia to end the war in the east. The message: Apparently, the U.S. wants Ukraine to make as little trouble as possible.
Biden's visit, his fifth as vice president, coincides with a key date on the Ukrainian political calendar. On Dec. 11, Prime Minister Arseniy Yatsenyuk's year-long immunity from dismissal will expire. That means his enemies, especially those on President Petro Poroshenko's team, will be able to try to get rid of him.
Last weekend, Mikheil Saakashvili, the governor of Odessa and former president of Georgia, made a sensational presentation at an anti-corruption forum he'd organized. He showed what he said was a chart of corruption schemes that cost Ukraine $5 billion a year -- only slightly less than the country receives in International Monetary Fund bailout loans. On the chart's edges were Ukraine's oligarchs, such as Rinat Akhmetov, the country's richest man, former Governor Igor Kolomoisky, and Dmitry Firtash, who is wanted by the U.S. on corruption-related charges. Yatsenyuk was at the center of the chart.
More
http://www.bloombergview.com/articles/2015-12-08/biden-tells-ukraine-to-do-nothing
The IMF Just Entered The Cold War, Forgives Ukraine's Debt To Russia
Submitted by Tyler Durden on 12/09/2015 12:49 -0500
On December 8, the IMF’s Chief Spokesman Gerry Rice sent a note saying:
“The IMF’s Executive Board met today and agreed to change the current
policy on non-toleration of arrears to official creditors. We will provide
details on the scope and rationale for this policy change in the next day or
so.”
Since 1947 when it really started operations, the World Bank has acted
as a branch of the U.S. Defense Department, from its first major chairman
John J. McCloy through Robert McNamara to Robert Zoellick and neocon Paul
Wolfowitz. From the outset, it has promoted U.S. exports – especially farm
exports – by steering Third World countries to produce plantation crops rather
than feeding their own populations. (They are to import U.S. grain.) But it
has felt obliged to wrap its U.S. export promotion and support for the dollar
area in an ostensibly internationalist rhetoric, as if what’s good for the
United States is good for the world.
The IMF has now been drawn into the U.S. Cold
War orbit. On Tuesday it made a radical decision to dismantle the condition that
had integrated the global financial system for the past half century. In
the past, it has been able to take the lead in organizing bailout packages for
governments by getting other creditor nations – headed by the United States,
Germany and Japan – to participate. The creditor leverage that the IMF
has used is that if a nation is in financial arrears to any government, it
cannot qualify for an IMF loan – and hence, for packages involving other
governments.
This has been the system by which the dollarized global financial system
has worked for half a century. The beneficiaries have been creditors in US
dollars.
But on Tuesday, the IMF joined the New Cold War. It has been
lending money to Ukraine despite the Fund’s rules blocking it from lending to
countries with no visible chance of paying (the “No More Argentinas” rule from
2001). When IMF head Christine Lagarde made the last IMF loan to Ukraine in the
spring, she expressed the hope that there would be peace. But President
Porochenko immediately announced that he would use the proceeds to step up his
nation’s civil war with the Russian-speaking population in the East – the
Donbass.
That is the region where most IMF exports have been made – mainly to
Russia. This market is now lost for the foreseeable future. It may be a
long break, because the country is run by the U.S.-backed junta put in place
after the right-wing coup of winter 2014. Ukraine has refused to pay not only
private-sector bondholders, but the Russian Government as well.
Morehttp://www.zerohedge.com/news/2015-12-09/imf-just-entered-cold-war-forgives-ukraines-debt-russia
Russia’s finance minister slams IMF policy on Ukraine’s debt
December 10, 9:27
Russian Finance Minister Anton Siluanov's article was published by the Financial Times on Wednesday night
LONDON, December 10. /TASS/. The decision of the International Monetary Fund (IMF) related to Ukraine’s sovereign debt has caused doubts about "the impartiality of an institution that plays a critical role in addressing international financial instability," Russian Finance Minister Anton Siluanov said in an article published by the Financial Times on Wednesday night.
"Imagine the Greek government had insisted that EU institutions
accept the same haircut as the country’s private creditors," the article
says. "The reaction in European capitals would have been frosty. Yet this
is the position now taken by Kiev with respect to Ukraine’s $3bn eurobond held
by Russia."
"The IMF, which has long refused to lend to countries that are in
arrears on payments to official creditors, earlier this week acceleratedring
may raise questions as to the impartiality of an institution that plays a
critical role in addressing international financial instability."
The Russian finance minister said that the repayment of sovereign debts in the world over the past 50 years "has been successful a change to this policy in advance of the December 2015 maturity date on our Eurobond," Siluanov said. "Russia has no desire to see the IMF curtail its funding programme for Ukraine, but we are concerned that changing this policy in the context of Ukraine’s politically charged restructul in large part due to the work of the IMF.
"Its well-founded principles should be changed only after due
consideration, and not in response to the politics of the moment," he said
in the article.
Earlier, IMF Executive Board had lifted the ban to lend to countries if
they fail to repay official creditors although Russia voted against it. In
particular, the decision means that the IMF will continue implementation of its
anti-crisis programme on Ukraine even if Kiev defaults on its payments to
Russia.
In December 2013, the presidents of Russia and Ukraine, Vladimir Putin and Viktor Yanukovych agreed that Moscow would grant Kiev a credit worth $15 billion through the placement of Ukrainian securities. Under this program bonds for 3 billion dollars were placed on the Irish Stock Exchange on December 20, 2013. Russia purchased the bonds using the funds from its National Welfare Fund.
More
http://tass.ru/en/economy/842895
At the Comex silver depositories
Wednesday final figures were: Registered 42.27 Moz, Eligible 116.16 Moz, Total
158.43 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Drumroll. And the winner is…. But this is clearly still not decided, though
Anglo Am and Glencore are clearly in a class of their own. More surely ahead.
“At the moment, none
of us can read China; it’s a very difficult market to read right now. It’s
surprised a lot of us. A lot of the infrastructure and projects they had on
plan did not take place.”
Ivan Glasenberg. CEO Glencore.
Anglo American overtakes Glencore to become FTSE's worst performer
Shares in Anglo American have fallen 76.5pc so far this year, compared with Glencore - down 74.65pc.
Anglo American has overtaken its rival Glencore to become the FTSE 100’s worst performer so far this year, a day after it announced a radical restructuring plan as it battles the collapse in commodity prices.Shares in Anglo American have nose dived 76.5pc since January, compared with Switzerland-based Glencore, which is currently nursing a loss of 74.65pc across the same period.
Since Monday almost £1bn has been wiped off the value of Anglo after it said it would slash its workforce from 135,000 to 50,000, suspend its dividend until the end of 2016 and trim an extra $1bn from capital expenditure this year.
However, as the market began to digest its plans to overhaul the business, the FTSE 100 stock fell a further 13pc this morning.
Investors continued to pile out of the stock as brokers issued a slew of bearish notes and slashed its target price.
Myles Allsop, of UBS, cautioned Anglo’s “material restructuring” is not enough to ease balance sheet concerns.
Describing the restructuring plans as “ambitious”, the investment bank
thinks prices for Anglo’s key commodities will remain subdued over the next few
year, with iron ore and copper set to move into oversupply and coal already
oversupplied. It also believes there is some potential for a recovery in
diamonds and platinum.
Meanwhile, Nick Hatch, a Canaccord Genuity analyst, said Anglo’s
challenge “remains substantial”, despite its heightened urgency to deliver on
its restructuring plans.
“When commodity prices do recover, the share price recovery could be
significant, but in the meantime investors should remain wary,” Mr Hatch said.
Shares
in Glencore came under severe pressure on September 28 when they plunged by
almost 30pc after broker Investec warned
the stock could be worthless if the dramatic fall in commodity
prices continued.
----An accelerating rout in commodity prices has hammered the industry this
year and put the sector under significant pressure to slash capital expenditure
and operational costs. On Tuesday, Iron ore slipped below the $40 a barrel mark for the first time since the spot price was introduced in 2008. The sharp fall in commodities prompted a mass sell-off across the sector, sending the FTSE 350 mining index tumbling to its lowest level in eleven years.
BHP Billiton and Antofagasta are also among the top fallers on Britain’s benchmark index so far this year, down 44.8pc and 43.8pc, respectively.
Top 10 FTSE 100 fallers this year:
- Anglo American (-76.5pc)
- Glencore (-74.65pc)
- BHP Billiton (-44.83pc)
- Standard Chartered (-44.63pc)
- Antofagasta (-43.77pc)
- Pearson (-37.98pc)
- Rio Tinto (-37.37pc)
- Rolls-Royce (-32.76pc)
- Weir Group (-32.74pc)
- Royal Dutch Shell (-32.74)
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?
Near zero friction from nanoscale lubricants
Date:
December 8, 2015
Source:
Department of Energy, Office of Science
Summary:
Friction hampers the movement of all mechanical parts, including engines for
transportation. Scientists built a system with virtually no friction. The
system wraps graphene flakes around nanodiamonds that then roll between a
diamond-like carbon-surface and graphene on silica.
Friction hampers the movement of all mechanical parts from engines,
motors, etc. in transportation, oil refineries, power plants, and other
facilities. At the Center for Nanoscale Materials, scientists built a system
with virtually no friction. The system wraps graphene flakes around
nanodiamonds that then roll between a diamond-like carbon-surface and graphene
on silica. Such hard ball bearings wrapped in slippery Teflon(R) tissue paper
rolling between two surfaces reduces the friction to almost zero.
The new system reduces contact areas and thus reduces friction to near
zero. Creating a low-friction situation has the potential for substantial cost
savings because friction accounts for most of the energy lost in moving
mechanical assemblies and wear accelerates mechanical failures.
Superlubricity is the state in which the friction between two sliding
surfaces is reduced to nearly zero. Friction and wear are the primary modes of
mechanical energy dissipation in moving assemblies, thus it is highly desirable
to minimize friction in real-world engineering-based applications. Structural
defect issues, however, have stymied the realization of superlubricity.
Previous studies have shown the beneficial effect of using graphene to reduce
friction. A new study demonstrates that superlubricity can be achieved at the
macroscale in a dry environment by the addition of nanodiamonds and graphene
flakes between two surfaces, one made of silicon and one made of diamond-like
carbon.
In this system, the coefficient of friction is just 0.004, and contact
areas are reduced by more than 65%. Analysis of the wear debris revealed that
the graphene flakes form nanoscroll-like features wrapping the nanodiamonds.
Computer simulations show that more and more graphene flakes scroll with time,
gradually reducing the contact area between the nanoscrolls and the
diamond-like carbon surface, which allows superlubricity to be attained.
The monthly Coppock Indicators finished November
DJIA: +25 Down. NASDAQ:
+121 Down. SP500: +45 Down.
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