Wednesday, 10 February 2016

Deutsche Bank – All’s Well.

Baltic Dry Index. 291 - 02        Brent Crude 30.98

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

Never believe anything in politics until it has been officially denied.

Otto von Bismarck

Who was it that said, “When it becomes serious, you have to lie?”  Oh that’s right, none other than Jean-Claude Juncker. Failed former Luxembourg Prime Minister, serial liar, president of the European Commission.  I have no idea if things are serious in Deutsche Bank or not, but a whole lot of Europeans are sure acting like things are serious. Very serious. We all know how to tell when Juncker’s lying because his lips move, but what about all the other usual suspects in a growing European bank crisis?

We open with Europe’s largest bank not in trouble, so that’ll be no large depositors bail-in then? Still anyone holding DB bank deposits above the bail-in limit, ought to be buying in aspirin and insurance right now. 21st century banksters don’t ring a bell when about to steal some of the unfortunate depositor’s cash. Just ask any hapless Greek or Cypriot. Then again, just ask any hapless American investor in Bear Stearns. Nothing to worry about really, DB is only counterparty to a mere 63 trillion dollars of leveraged gambling derivatives bets.

"Our balance sheet is not weakened at all."

Bear Stearns CEO Alan Schwartz, March 13, 2008. Bust March 17, 2008.

German Finance Minister Schaeuble Has 'No Concerns' Over Deutsche Bank

February 9, 2016 — 2:00 PM GMT

German Finance Minister Wolfgang Schaeuble said he isn’t worried about Deutsche Bank, amid rising investor concern over the bank's finances.
“No, I have no concerns about Deutsche Bank,” Schaeuble told Bloomberg Television in Paris after a meeting of French and German finance chiefs on Tuesday. He didn’t elaborate further.
Deutsche Bank co-Chief Executive Officer John Cryan told employees in a memo that the bank is “rock solid,” has a “strong” capital and risk position and “took advantage of this strength to reassure the market of our capacity and commitment to pay coupons to investors.”

Deutsche Bank Is `Absolutely Rock-Solid,' Cryan Tells Employees

February 9, 2016 — 12:06 PM GMT
Deutsche Bank AG is “absolutely rock-solid,” Co-Chief Executive Officer John Cryan wrote in a letter to employees, seeking to reassure markets after a plunge in the shares.
Cryan said he isn’t concerned about the Frankfurt-based lender’s ability to meet legal costs, he wrote in the memo published on Tuesday. While Deutsche Bank will “almost certainly” have to add to its provisions for legal costs this year, the firm has already accounted for it in its financial planning, according to Cryan.
“I am personally investing time to resolve successfully and speedily open regulatory and legal cases,” he wrote. “I want to remove the uncertainty among staff and in the market that these cases cause. A small group of senior people, led by me, will focus on this. For everyone else, we ask you to continue to focus on our clients and on the implementation of our strategy.”

Deutsche Bank's Big Unknowns

By Duncan Mavin Lionel Laurent  Feb 9, 2016 12:16 PM GST
Give John Cryan at least some credit. If nothing else, Deutsche Bank's new CEO should get a pat on the back for prompt communication.
Deutsche's Pain
Since he took over last year, the bank has twice announced poor quarterly earnings ahead of schedule. On Monday, the bank reassured investors it can make coupon payments on some of its riskiest debt, bringing forward by a month a regular disclosure on the bank's capacity to pay investors.
This most recent move is aimed at stopping the bank's difficult-to-fathom equity story -- does the bank have a viable model to grow earnings? -- from infecting credit markets, which are more concerned about the bank's ability to honor its debts. Those concerns are partly specific to the bank and partly much, much broader.
First, the broad backdrop: Deutsche Bank and other banks across Europe have issued 91 billion euros ($102 billion) in so-called Additional Tier 1 capital since April 2013, urged on by regulators who want them to shore up their capital buffers.
Credit investors, starved of yield because of low interest rates globally, have lapped up the securities. The reason? They offer a slightly higher yield than regular bank debt, because coupon payments are optional. In reality, banks will do just about anything to meet their AT1 payments: missing a payment would send a message of panic to credit and equity investors alike.

Other European bankster have their troubles too.  Seems like 2008 de ja vu all over again.

UniCredit Fourth-Quarter Profit Declines on One-Time Charges

February 9, 2016 — 12:41 PM GMT Updated on February 9, 2016 — 2:11 PM GMT
UniCredit SpA said fourth-quarter profit fell on one-time charges related to the lender’s reorganization and its share of costs for winding down four Italian lenders.
Net income declined to 153 million euros ($172 million) from 170 million euros a year earlier, the Milan-based bank said on Tuesday. Earnings beat the average analyst estimate compiled by Bloomberg, which was for a loss of about 77 million euros. Earnings were boosted by a 640 million-euros tax benefit in the period.
UniCredit is cutting thousands of jobs, curbing risk and disposing of non-strategic assets to increase profitability and boost capital as record-low interest rates squeeze margins. Chief Executive Officer Federico Ghizzoni, who approved a new strategic plan in November focusing on cost cutting and simplification, is under pressure from some investors urging a deeper revamp.
It was not “all good news in core profitability,” said Benjie Creelan Sandford, an analyst at Nomura with a neutral rating on the stock. Provisions were higher than expected and commissions disappointed, he said.
---- UniCredit, which emerged with the smallest capital margin among Italy’s biggest banks from the European Central Bank’s review of capital requirements for 2016, has to to maintain a common equity Tier 1 ratio of at least 10 percent this year, including a 25 basis-point buffer for systemically important banks.

European Stocks Retreat to Lowest Since 2013 as Banks Tumble

February 9, 2016 — 8:28 AM GMT Updated on February 9, 2016 — 5:00 PM G
European stocks tumbled for a seventh day and a gauge of banks slid to its lowest level since 2012 as the global equity rout showed no signs of abating.

Greece’s Eurobank Ergasias SA led lenders lower, sliding 12 percent, as the cost of insuring financial debt rose amid concern over whether banks are strong enough to cope with a downturn. Credit Suisse Group AG lost 8.4 percent after the Swiss National Bank said it could reduce its negative deposit rate further. Deutsche Bank AG reversed gains, falling 4.3 percent to its lowest price since at least 1992 even as it reassured investors that it has enough cash to pay its debts.

The Stoxx Europe 600 Index dropped 1.6 percent to 309.39 at the close of trading, its lowest level since October 2013, sending it into so-called “oversold” territory. The volume of shares changing hands was 52 percent higher than the 30-day average. A gauge tracking stock swings rose to its highest in three weeks and has jumped 53 percent this year. Greece’s ASE Index slid to its lowest since at least 1989.

“Volatility is getting very high,” said Guillermo Hernandez Sampere, head of trading at MPPM EK in Eppstein, Germany. “Investors need to increase their cash and be careful in case they see any buying opportunities. A technical rally may easily get sold again, we won’t come back to calm waters soon.”

European lenders are being pummeled as concern about credit markets seeps into equities, with Deutsche Bank strategists saying a further 200 basis points widening in credit spreads would point to 8 percent downside for stocks, with banks suffering the most. 

----Commerzbank AG fell 4.4 percent to its lowest price since July 2013. Swedbank AB slid 5.7 percent as Sweden’s biggest mortgage bank ousted its chief executive officer. Svenska Handelsbanken AB added 1.6 percent after reporting a 35 percent jump in fourth-quarter profit.

From history.

Bear Stearns

---- In the years leading up to the failure, Bear Stearns was heavily involved in securitization and issued large amounts of asset-backed securities, which in the case of mortgages were pioneered by Lewis Ranieri, "the father of mortgage securities".[1] As investor losses mounted in those markets in 2006 and 2007, the company actually increased its exposure, especially the mortgage-backed assets that were central to the subprime mortgage crisis. In March 2008, the Federal Reserve Bank of New York provided an emergency loan to try to avert a sudden collapse of the company. The company could not be saved, however, and was sold to JP Morgan Chase for $10 per share, a price far below its pre-crisis 52-week high of $133.20 per share, but not as low as the $2 per share originally agreed upon by Bear Stearns and JP Morgan Chase.[2]

The collapse of the company was a prelude to the risk management meltdown of the investment banking industry in the United States and elsewhere that culminated in September 2008, and the subsequent global financial crisis of 2008–2009. In January 2010, JPMorgan ceased using the Bear Stearns name.[3]

In oil news, don’t ask. Sell Scotland, sell, Canada, sell Texas.

Cheap oil for longer may trigger a new era of OPEC dominance, warns IEA

Published: Feb 9, 2016 1:48 p.m. ET
Lower oil prices for longer could result in a new epoch of dominance for the Organization of the Petroleum Exporting Countries.

That could increase risks that non-OPEC countries again will become dependent on oil from the volatile region, according to comments on Tuesday from officials at the International Energy Agency.

Speaking at the International Petroleum week in London, Keisuke Sadamori, director of the IEA’s energy markets and security division, warned that if oil prices remain at current lows, reliance on Middle Eastern oil could return to a 1970s scenario.

In the early 1970s, OPEC production accounted for more than 50% of global output, making countries outside the cartel heavily dependent on the organization. This had severe consequences for the U.S. in 1973 when Arab members of OPEC imposed an oil embargo against the country as a response to the American decision to support the Israeli military and its involvement in the Yom Kippur War. The embargo led to a sharp jump in oil prices outside of the Middle East and strained a U.S. economy that struggled due to its reliance on OPEC oil.

“All oil producers have been negatively affected [by the slump in oil prices], but at the end of the day, there will only be the Middle Eastern producers, which have a very low marginally cost, to dominate the market [if prices stay low],” he said.

According to the IEA, OPEC production could jump back above 50% of global output by the 2030s if the sluggish oil-price environment allows the cartel to pursue its strategy of grabbing more market share.

Oil Bankruptcies Seen Spurring M&A on Signal Prices Near Low

February 9, 2016 — 12:40 AM GMT Updated on February 9, 2016 — 7:45 AM GMT
About 150 oil and gas companies tracked by energy consultant IHS Inc. may go bust as a supply glut pressures prices and punishes revenues.
The number of companies at risk is more than twice the 60 producers that have already filed for bankruptcy, Bob Fryklund, chief upstream analyst at IHS, said in an interview. A further shake out would help stimulate deals that have been on hold because buyers and sellers have disagreed on asset values, he said.
Oil has collapsed about 70 percent over the past two years as U.S. shale producers boosted output and the Organization of Petroleum Exporting Countries flooded the market with crude to drive out higher-cost suppliers. More bankruptcies would be one signal that energy prices have reached a bottom and would help kick off deals for the $230 billion worth of oil and gas assets currently up for sale, according to Fryklund.
“Nobody is buying because there is a mismatch between expectations,” Fryklund said in an interview in Tokyo. “We need to close that gap. And the way that that will happen is the rest of those bankruptcies will go forward.”
Companies that plan to make investments are likely to wait for prices to gain for six months because they want to be confident in a recovery, according to Fryklund.
---- Low prices are also spurring greater efficiency, according to IHS. Operating costs on a per barrel basis declined about 35 percent last year in North America and have dropped about 20 percent globally, according to the consultant. Crude output from North Dakota rose through most of last year and some producers in the Permian Basin in western Texas can break-even drilling oil at $35 a barrel, he said.

Shale patches in the U.S. are pumping out more oil and gas than the government previously thought, according to the EIA’s Drilling Productivity Report released Monday. The agency predicts the seven major formations to produce 5.02 million barrels a day in February, up from last month’s forecast of 4.83 million a day.

---- While IHS says U.S. production may fall by about 600,000 barrels a day this year, drillers would begin raising output again if prices averaged near $45 for about six months, Fryklund said.

“You would see the spinning starting, and the growth machine starting back up again,” said Fryklund.

"Gold would have value if for no other reason than that it enables a citizen to fashion his financial escape from the state."

William F. Rickenbacker

At the Comex silver depositories Tuesday final figures were: Registered 28.90 Moz, Eligible 127.70 Moz, Total 156.60 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Don’t look now but everyone in North America is betting the ranch on an oil price recovery sooner or later, one made in heaven and just right for future exploitation, after all the others fold.

Canadian energy companies sell "jewels" to keep oil sands afloat

Tue Feb 9, 2016 | 4:00 AM EST
CALGARY, Alberta Feb 9 (Reuters) - Faced with record low prices for heavy crude, Canadian energy companies are sacrificing other parts of their business to keep higher-cost oil sands production going and safeguard the billions already invested in these multi-decade projects.
Companies including Husky Energy Inc, MEG Energy Corp and Pengrowth Energy Corp are selling assets or slowing light and conventional oil exploration and production, even as they forge ahead with oil sands projects that are in many cases bleeding money on every barrel.
Although the move to support higher-cost production seems counterintuitive, oil sands companies take a longer-term view that shutting plants in Alberta would be very expensive and risk permanently damaging carefully-engineered reservoirs, underground deposits of millions of barrels of tarry bitumen.
It is easier, and cheaper, to shut down and later restart conventional wells.
Producers are also betting that oil prices will eventually recover. The latest Reuters poll of oil analysts forecasts the U.S. benchmark will average $41 a barrel in 2016, a level where most Canadian oil sands projects can break even.
Bankers say the need to bolster balance sheets and cover oil sands losses will boost the number of Canadian energy deals this year, particularly sales of pipelines, and storage and processing facilities.
"The market was down significantly last year in terms of energy M&A, and we think that's going to reverse," said Grant Kernaghan, Canadian Investment Banking head for Citigroup.
MEG is selling its 50 percent stake in the Access pipeline, which analysts value at around C$1.5 billion ($1.08 billion), while Husky is selling a package including 55,000 barrels of oil equivalent per day of oil and natural gas production, royalties and midstream facilities, valued at between C$2.4 billion to C$3.2 billion.

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, excellent coverage of current battery development, no pun intended, at the “graphene polymer batteries” link.

Graphenano and Grabat launch graphene-based batteries!

Feb 08, 2016
The Spanish Graphenano recently introduced, together with its Chinese partner Chint, graphene polymer batteries that reportedly allow for a range of 800 kilometers in electric vehicles and can be charged in a few minutes. The batteries are meant for domestic use, in the automotive sector (both cars and bicycles), drones or even pacemakers. 
The batteries are supposed to be manufactured in Yecla (Murcia), Spain, and the companies hope to have operational prototypes in mid-2016 and commercial batteries at the end of this year. The batteries are said to have a density of 1,000 Wh / kg and a voltage of 2,3V. Independent analyses by TÜV and Dekra show that the batteries are safe and are not prone to explosions like lithium batteries. 
Manufacturing in Spain and China will be possible thanks to the contribution of Chint Group, in a two-step commercialization project.

Graphene decharging and molecular shielding

Date: February 8, 2016

Source: Institute of Organic Chemistry, Russian Academy of Sciences

Summary: A new study sheds light on unique property of 2-D materials -- ability to shield chemical interactions at the molecular level. Discovery of shielding effect allows scientists to control reactivity of molecules, tune activity of catalysts, and construct new generation of carbon materials.
A new study sheds light on unique property of 2-D materials -- ability to shield chemical interactions at the molecular level. Discovery of shielding effect allows scientists to control reactivity of molecules, tune activity of catalysts, and construct new generation of carbon materials.
Joint theoretical and experimental study suggested that graphene sheets efficiently shield chemical interactions. One of the promising applications of this phenomenon is associated with improving quality of 2D materials by "de-charging" of charged defect centers on the surface of carbon materials.
Another important feature is the ability to control selectivity and activity of the supported metallic catalysts M/C on the carbon substrate.
Researchers studied carbon materials with defects on the surface (such defects represent an active species, which should be shielded). Indeed, the experiments demonstrated that the defects areas are quite reactive and, as one may expect, defect sites retain high activity towards various molecules.
However, as soon as the defects were covered with few layers of graphene flakes, the distribution of reactive centers became uniform (without localized reactivity centers typical for defect areas). In other words, covering of the surface defects with graphene layers has decreased the influence of charged defects and made them "invisible" in terms of chemical interactions at the molecular level.

The monthly Coppock Indicators finished January

DJIA: -06 Down. NASDAQ: +75 Down. SP500: -02 Down.  Both the DJIA and the S&P 500 have now turned negative.

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