Baltic Dry Index. 415 -14 Brent Crude 30.67
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
This time it’s different!
Stock promoter’s adage.
Try not to look scared, but a Bear has arrived on Wall Street. And not
just any bear, but one of the biggest Grizzlies around. JP Morgan just turned
bearish on US stocks. When America sneezes we all catch a cold, goes the old
saying, and America has been sneezing for months now. The Baltic Dry Index has
been signalling a growing global trade disaster for months, and now the oil
price collapse heralds a commodity disaster in the making.
Below, yesterday’s bad, bad news for stocks.
Bearish J.P Morgan says sell stocks on any rally
Published: Jan 11, 2016 2:13 p.m. ET
For first time in seven years, advice moves away from buy the dips
J.P. Morgan Chase has turned its back on the stock market: For the first time in seven years, the investment bank is urging investors to sell stocks on any bounce.“Our view is that the risk-reward for equities has worsened materially. In contrast to the past seven years, when we advocated using the dips as buying opportunities, we believe the regime has transitioned to one of selling any rally,” Mislav Matejka, an equity strategist at J.P. Morgan, said in a report.
Aside from technical indicators, expectations of anemic corporate earnings combined with the downward trajectory in U.S. manufacturing activity and a continued weakness in commodities are raising red flags.
“We fear that the incoming fourth-quarter reporting season won’t be able to provide much reassurance for stocks,” he said.
Expectations for earnings are so bearish that the hurdle rate—the minimum rate of return on an investment that makes it worth the risk—for fourth-quarter results is now minus 4%, compared with plus 5% several months earlier.
“If this were to materialize, it would be the weakest quarter for EPS delivery so far in the upcycle,” said Matejka.
More
http://www.marketwatch.com/story/bearish-jp-morgan-says-sell-stocks-on-any-bounce-2016-01-11
Today Was a Wild Day for the Oil Market
Crude prices are tumbling.
January 11, 2016 — 8:31 PM GMT
Crude oil is getting slammed on Monday, with front-month
contracts for Brent and West Texas Intermediate each down more than 6 percent
at their lows for the day.
Meanwhile, Western Canadian Select, a heavier blend of crude, is trading at $16.32 per barrel.
A supply response to lower prices continues to be slow in coming, and there are signs that demand growth from China is poised to moderate in the year ahead, according to Barclays analysts.
The drop in oil prices has been accompanied by a fresh round of bearish commentary, with Morgan Stanley calling for prices to fall as low as $20 per barrel while Guggenheim sees crude reaching $25 per barrel.
For the Brent grade, the entire futures curve is shifting downward. West Texas Intermediate futures contracts are down through 2021, though prices beyond that period have actually gained since Friday.
A steeper curve increases the attractiveness of buying crude oil with the intention of selling it at a later date. Analysts estimate that a steeper curve is necessary to make storing oil on a vessel profitable for traders.
“Just a quick glimpse along the forward curve serves as an endorsement for the ‘lower for longer’ mantra that swirls like a sand storm round the current crude complex,” wrote Matt Smith, director of commodity research at ClipperData. “The December 2016 contract is fast approaching a test of $40, while you have to go out to 2020 to see a price above $50. The furthest you can go out on the futures curve is 2024, and even then prices do not break $54. That certainly is lower for longer.”
More
Plunging prices could force a third of U.S. oil firms into bankruptcy
Published: Jan 11, 2016 11:37 p.m. ET
Crude-oil prices plunged more than 5% on Monday to trade near $30 a barrel,
making the specter of bankruptcy ever more likely for a significant chunk of
the U.S. oil industry.Three major investment banks — Morgan Stanley MS, +0.28% , Goldman Sachs Group Inc. GS, +1.09% and Citigroup Inc. C, +1.56% — now expect the price of oil to crash through the $30 threshold and into $20 territory in short order as a result of China’s slowdown, the U.S. dollar’s appreciation and the fact that drillers from Houston to Riyadh won’t quit pumping despite the oil glut.
As many as a third of American oil-and-gas producers could tip toward bankruptcy and restructuring by mid-2017, according to Wolfe Research. Survival, for some, would be possible if oil rebounded to at least $50, according to analysts. The benchmark price of U.S. crude settled at $31.41 a barrel, setting a 12-year low.
More than 30 small companies that collectively owe in excess of $13 billion have already filed for bankruptcy protection so far during this downturn, according to law firm Haynes & Boone.
Morgan Stanley issued a report this week describing an environment “worse than 1986” for energy prices and producers, referring to the last big oil bust that lasted for years. The current downturn is now deeper and longer than each of the five oil price crashes since 1970, said Martijn Rats, an analyst at the bank.
Asia stocks wary as China concerns remain, oil drops
Asian stocks held near four-year lows and crude oil prices approached a
20 percent drop in less than two weeks as investors worried over the extent of
China's economic slowdown and its impact on emerging markets.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS
edged 0.4 percent higher but still stood near a four-year low touched on
Monday, and was still down more than 8 percent since the start of 2016. It fell
12 percent last year.
"Investors are still concerned about the extent of China's slowdown
and while we may be in the middle of a consolidation phase, we have yet to see
any data indicating a turnaround which is feeding the overall
uncertainty," said Ben Pedley, head of investment strategy for Asia at
HSBC Private Bank in Hong Kong.
With investors still licking their wounds from last year's plunge in global commodity prices and a sharp selloff in Chinese markets, 2016 has brought about more pain for investment portfolios in the form of a deepening slowdown in the global economy and volatile Chinese markets.
Japan's Nikkei .N225 fell 1.3 percent after a market holiday on Monday, hitting a three-month low and down over 8 percent so far this year while Chinese stocks .SSEC swung around in volatile opening trades.
According to MSCI global indexes, BRIC and other emerging market indexes have bled the most so far this year with losses of 7.2 and 6.8 percent losses each. MSCI's broadest gauge of world stocks .MIWD00000PUS fell to its lowest level since Sept 2013.
More
In EU news, life goes on in a parallel universe. Mrs Merkel is busy turning Germany into Syria, to the horror of all its neighbours and most Germans. Brexit is getting a big boost in the polls from Mrs Merkel’s folly. Now according to Bank of America Merrill Lynch, China’s getting ready to dump Eurozone bonds. The European Commission has just ordered Belgium to get back 700 million euro of illegal tax breaks for mostly EU firms.
China FX reserve sell-off to soon move beyond U.S. Treasuries: BAML
LONDON
|
The unwinding of China's foreign exchange reserves could soon extend beyond
U.S. Treasuries, with U.S. corporate and euro zone sovereign bonds among the
assets most vulnerable to selling from Beijing, Bank of America Merrill Lynch
said on Monday.China sold a record $510 billion of FX reserves last year to counter the damaging impact on an already decelerating economy from the surge of capital fleeing the country.
The lion's share of that came from $292 billion sales of U.S. Treasury debt, followed by $92 billion sales of U.S. stocks, $3 billion of U.S. agency bonds and $170 billion of non-U.S. assets, according to BAML estimates.
More
Belgian 'sweetheart' tax deals are illegal, says EU
Commission calls for clawing back of €700m from 35 mainly European companies benefiting from illegal tax breaks
Belgium must claw back €700m in illegal tax breaks, the EU has ruled, in its latest crackdown on "sweetheart" tax deals in Europe.The country's "excess profit" tax scheme is the latest corporate tax arrangement to fall foul of Brussels rules on state aid.
The European Commission has ordered the government to recover money from 35 mainly European, but unidentified, companies across a range of sectors.
The Belgian scheme - which has been in force since 2005 - allowed companies to reduce their corporate tax bill by as much as 90pc, said the Commission.
The ruling is the first high-profile sweep of European, rather than US companies, and comes after the EU ruled against similar tax deals for Starbucks and Fiat in the Netherlands and Luxembourg.
Brussels has also launched an investigation into McDonald's tax arrangements and is due to deliver verdicts on Apple and Amazon's deals with Ireland and Luxembourg this year.
Around €500m of the €700m will be paid by companies within the EU, said the Commission.
Margrethe Vestager, EU competition commissioner, said Belgium's tax
breaks "distorted" competition by favouring large multinationals over
smaller companies.
"National tax authorities cannot give any company, however large,
however powerful, an unfair competitive advantage compared to others,"
said Ms Vestager.
"If a country gives certain multinationals illegal tax benefits
that allow them to avoid paying taxes on the majority of their actual profits,
it seriously harms fair competition in the EU, ultimately at the expense of EU
citizens."
More
We close for the day with another update on the El Nino, currently ranked the third strongest on record, though others think it might be the strongest on record.
What to expect from El Niño
The third-recorded super El Niño is underway. Top climate expert Kevin Trenberth reports.
Release
Date: Jan 10, 2016
A major El Niño is under way now. It already has substantially influenced
weather patterns around the globe, but could have even bigger impacts this
winter. There have been only two “super” El Niños recorded until now: in
1982-83 and 1997-98. We are now experiencing a third “super” El Niño.Every El Niño cycle is different. The effects from this year’s already include a record number of hurricanes/typhoons in the Pacific and intense wildfires in Indonesia.
In the United States over the next several months, El Niño is expected to cause heavy rains across the South, with the potential for coastal flooding in California, along with relatively mild and dry weather in the northern states. Global climate change, which, along with the El Niño, is making 2015 the warmest year on record, is likely to amplify these impacts.
What is El Niño?
El Niños are not uncommon. Every three to seven years or so, the surface waters of the tropical Pacific Ocean become extremely warm from the International Dateline to the west coast of South America. This process causes changes in the local and regional ecology, and is clearly linked with abnormal global climate patterns.Historically “El Niño” referred to the appearance of unusually warm water off the coast of Peru near Christmastime (Niño is Spanish and refers to “the boy Christ child”). Today it describes broader changes that occur across the Pacific basin.
Oceanic and atmospheric conditions in the tropical Pacific fluctuate somewhat irregularly between warm El Niño phases and cold phases in which surface waters cool across the tropical Pacific. These cooling events are called “La Niña” (“the girl” in Spanish). The most intense phase of each event typically lasts about a year.
El Niño is linked to major changes in the atmosphere known as the Southern Oscillation (SO). Scientists call the whole phenomenon the El Niño–Southern Oscillation (ENSO). During El Niño, higher-than-normal surface air pressures develop over Australia, Indonesia, Southeast Asia and the Philippines, producing drier conditions or even droughts. Dry conditions also prevail in Hawaii, parts of Africa, and northeastern Brazil and Colombia.
Lower pressures develop over the central and eastern Pacific, along the west coast of South America, parts of South America near Uruguay and southern parts of the United States in winter, often producing heavy rains and flooding. Regions that are typically dry during El Niño events tend to become excessively wet during La Nina events, and vice versa.
More
Bull markets take
the stairs up. Bear markets take the elevator down.
Wall Street adage.
At the Comex silver depositories Monday
final figures were: Registered 36.51 Moz, Eligible 126.10 Moz, Total 162.61 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Yes, the usual suspects again today, crooked
central banksters and the renewed currency wars. Stay long fully paid up
physical gold held outside of the banking system. Inside the banking system
they’ll just Corzine (hypothecate) it away until it’s all gone.
Intervention Loses Potency Just as Currency Wars Seen Escalating
January 10,
2016 — 10:00 PM GMT Updated on January 11, 2016 — 9:05 AM GMT
As a new round of competitive devaluation looms, evidence is mounting
that currency interventions are losing their potency.
Mexico’s peso fell to a record as Cantor Fitzgerald LP criticized the
nation’s efforts to strengthen the exchange rate as “mostly futile.” A study by
Brazilian central bankers last week found “no evidence” that their intervention
program was affecting currency volatility. And far from driving a
sustained decline in the krona, mooted sales by Sweden’s Riksbank may
actually be a buying opportunity, according to Citigroup Inc., the world’s
biggest foreign-exchange trader.
China’s efforts to depreciate the yuan have raised the stakes as other
nations seek to weaken their own currencies to stay competitive or
strengthen them as a plunge in commodity prices ravages their citizens’ buying
power. Mexican Finance Minister Luis Videgaray said Jan. 7 that the
world’s No. 2 economy risks triggering competitive devaluations -- known
as a currency
war-- while Sweden put in place measures that will help it step in to curb
the krona’s gains and boost inflation.“There’s a big question mark over the ability of individual central banks -- particularly for small, open economies -- to really influence exchange rates through intervention in anything other than a short-term perspective,” said Ken Dickson, the Edinburgh-based investment director for currencies at Standard Life Investments Ltd. ,which manages about $360 billion. In Sweden’s case, “it’s very difficult for the central bank to fight the market if it wants to go the other way."
Still Stronger
While the krona has declined more than 1 percent versus the euro since the Riksbank said Dec. 30 it was ready to intervene, it’s stronger against most other major currencies. Minutes of the central bank’s December meeting, published Friday, showed a number of policy makers said intervention may be necessary.Standard Life’s Dickson expects the krona to gain versus the euro, and the median forecast in a Bloomberg strategist survey is for an advance to 9.2 per euro this quarter, from 9.26 on Monday. The krona will strengthen, with a gain to about 9.1 a likely trigger for intervention, “but not a floor,” London-based Citigroup analyst Josh O’Byrne wrote in a Jan. 8 report.
It’s almost a year to the day since the cost of intervening to weaken the franc prompted Switzerland to scrap its exchange-rate ceiling for a mixed policy of franc sales and negative interest rates. Yet its currency is still 10 percent stronger than the 1.20-per-euro limit it was forced to abandon.
Ending the cap reverberated around financial markets -- just as China’s devaluation is doing now.
More
Derivatives
are financial weapons of mass destruction.
Warren
Buffett.
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?
Visualizing atoms of perovskite crystals
Researchers conduct the first atomic resolution study of perovskites used in next generation solar cells
Date:
January 8, 2016
Source:
Okinawa Institute of Science and Technology (OIST) Graduate University
Summary:
Researchers conduct the first atomic resolution study of perovskites used in
next generation solar cells.
Organic-inorganic
perovskite materials are key components of the new generation of solar cells.
Understanding properties of these materials is important for improving lifetime
and quality of solar cells. Researchers from the Energy Materials and Surface
Sciences (EMSS) Unit, led by Prof. Yabing Qi, at the Okinawa Institute of
Science and Technology Graduate University (OIST) in collaboration with Prof.
Youyong Li's group from Soochow University (China) and Prof. Nam-Gyu Park's
group from Sungkyunkwan University (Korea) report in the Journal of the
American Chemical Society the first atomic resolution study of
organic-inorganic perovskite.
Perovskites are a class of materials with the general chemical formula
ABX3. A and B are positive ions bound by negative ions X. Organic-inorganic
perovskites used in solar cells are usually methylammonium lead halides
(CH3NH3PbX3, where X is bromine, iodine, or chlorine). The OIST scientists used
a single crystal of methylammonium lead bromide (CH3NH3PbBr3) to create
topographic images of its surface with a scanning tunneling microscope.
This microscope uses a conducting tip that moves across the surface in a
manner very similar to a finger moving across a Braille sign. While the bumps
in Braille signs are a few millimetres apart, the microscope detects bumps that
are more than million times smaller -- atoms and molecules. This is achieved by
the quantum tunneling effect -- the ability of an electron to pass through a
barrier. The probability of an electron passing between the material surface
and the tip depends on the distance between the two. The resulting atomic-resolution
topographic images reveal positions and orientations of atoms and molecules,
and also provide a detailed look at structural defects in the surface.
----The
current findings shed light on molecule-ion interplay on the surface of an
organic-inorganic crystal and should help to improve designs of future solar
cells. The next goal of the researchers is to examine interactions between
perovskites and other molecules, for example water molecules that are known to
interfere with the performance of solar cells.
More
The monthly Coppock Indicators finished December
DJIA: +18 Down. NASDAQ:
+110 Down. SP500: +36 Down.
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