Tuesday, 2 February 2016


Baltic Dry Index. 314 - 03        Brent Crude 33.57

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

True, governments can reduce the rate of interest in the short run, issue additional paper currency, open the way to credit expansion by the banks. They can thus create an artificial boom and the appearance of prosperity. But such a boom is bound to collapse soon or late and to bring about a depression. 

Ludwig von Mises.

Oil’s rally attempt based on rumours of a deal between OPEC and Russia over, sanity returned to the oil patch.  Fear of a new recession arriving further depressing oil demand, increased pricing pressure on crude oil. Not to worry though, most of the media and bubblevision are babbling over American politics and “Alphabet” (Google,) so another day of the great disconnect seems likely. Deficits didn’t matter until one day they did. This disconnect doesn’t matter until one day it will.

S&P Lowers Shell's Rating, Puts Other Oil Majors on Watch

February 1, 2016 — 6:50 PM GMT Updated on February 2, 2016 — 5:01 AM GMT
Royal Dutch Shell Plc had its debt rating cut to the lowest since Standard & Poor’s began coverage in 1990, and downgrades of several other major European oil and gas companies will probably follow in coming weeks.

The long-term credit rating for the world’s third-largest oil producer by market value was reduced one level to A+, the fifth-highest investment grade, from AA-, and was placed on watch for another possible reduction, the ratings agency said in a statement Monday. S&P also assigned a negative outlook to BP Plc, Eni SpA, Repsol SA, Statoil ASA and Total SA.

----S&P’s moves come after the ratings agency lowered its 2016 oil price assumption Jan. 12 for Brent crude by $15 a barrel to $40. The 52 percent average price drop in 2015 will not be matched by most companies’ cost and spending reductions, S&P said.

"We now believe many major oil and gas companies’ current and prospective core debt coverage metrics are likely to remain below our rating guidelines for two or three years as the industry adjusts to lower prices," S&P analysts said in the report.

Jonathan French, a spokesman for Shell, declined to comment in an e-mail.

Oil producers lost more than $1.7 trillion in market value since crude prices began to slide. The specter of shrinking cash flow prompted more than 240,000 job cuts as drillers canceled rig contracts, slashed dividends and walked away from their riskiest, most ambitious projects.

A big reason it’s too late for OPEC to cut production

Published: Feb 1, 2016 9:46 a.m. ET

Output cut now would undermine OPEC’s strategy, analysts at Goldman Sachs say

You snooze, you lose. OPEC may have missed an opportunity to cut oil production, likely leaving oil prices stuck under $40 a barrel for the next five months, analysts at Goldman Sachs warn.
In a note out on Monday, the commodity analysts, led by Damien Courvalin and Jeffrey Currie, argued that not only is the oil cartel is highly unlikely to cut output but even if it did, the move would do little to push prices higher.
“Given the likely time necessary to enact such cuts, the continued large builds in U.S. and global inventories and the fast pace at which U.S. Gulf Coast spare storage capacity is filling, it may already be too late for OPEC producers to be able to prevent another large decline in prices,” they said in the report.
“While prices may rally initially upon announcement, we would expect this move to fade and the oil forward curve to remain in contango until inventories decline, just as was the case [during the Asian crisis] in 1998-1999,” they added. Contango occurs when the spot price of oil is lower than the futures price.
As a result, the bank reiterated the view that prices need to stay low for longer to balance the market and weed out production from high-cost producers. This “inflection phase” requires that oil prices remain between $40 a barrel — the level where companies are experiencing financial stress — and $20 — the level where producers experience operational stress — until the second half of 2016, the analysts said.
“This phase will be characterized by a highly volatile and trend-less market with the price lows likely still to be set,” they added.
---- However, Goldman Sachs provided a whole host of reasons the cartel won’t agree to change output and why a cut ultimately would be “self-defeating”.

In US news, is America already in recession? If not in recession, it soon will be it seems to this old trading dinosaur, despite Bloomberg’s everything’s rosy attempt at positive spin. At best both America and China are slowing fast, with the EUSSR dead in the water and continental Europe swarming with economic migrants. At worst, America has dropped into recession, China is in the process of a hard landing, and Europe’s a basket case.

Manufacturing in U.S. Shrank in January for a Fourth Month

February 1, 2016 — 3:00 PM GMT Updated on February 1, 2016 — 4:06 PM GMT
Manufacturing in the U.S. shrank in January for a fourth consecutive month as businesses cut staffing plans. Growth resumed in new orders and production, indicating some stabilization in the industry.

The 48.2 reading for the Institute for Supply Management’s index followed December’s 48 level that was the weakest since June 2009, data from the Tempe, Arizona-based group showed Monday. The results were lower than the 48.4 median forecast in a Bloomberg survey of 79 economists. Levels less than 50 for the gauge indicate contraction.

Factories are buffeted by persistent weakness in the oil industry, the stronger dollar and cooling overseas markets that also limited growth last quarter. The report showed the gauge of new orders, a leading signal for production, grew for the first time in three months, which would help manufacturing to eventually strengthen.

“This may be signaling the start of some stabilization in manufacturing activity and U.S. economic activity,” said Millan Mulraine, deputy head of U.S. research and strategy at TD Securities USA LLC in New York.
“It’s good enough to know things haven’t gotten worse. The rise in new orders is encouraging.”

We end for the day with yet more reasons to break up the wealth destroying, nation destroying, migrant magnet, EUSSR. Who am I to disagree with the Heritage Foundation.

EU should be broken up, suggests world index of economic freedom

The startling finding of the Heritage Foundation index for 2016 is how chronically 'unfree' the European Union still is

Britain has overtaken the United States in the global index of economic freedom, jumping three points to 10th place.

What is striking about the 2016 index released today by the Heritage Foundation is the shockingly “unfree” state of the European Union.
What you have is a northern free-zone clustered around the UK, Ireland (7), the Netherlands (16), and the Nordic-Baltic region of the old Hanseatic League, with Switzerland (4) as ever near the top, and safely beyond the clutches of Brussels and regulatory asphyxiation.
Or put another way, it is the Protestant alliance that battled reactionary Habsburg absolutism in the late 16th and early 17th Centuries – with Germany split within, torn in both directions.
This Northern grouping is roughly that which would emerge as a closely linked area of prosperity if Britain left the EU. In my view most of these states would also pull out within 10 to 15 years – de facto, if not jure – once Britain had set the ball rolling.
Germany would be left trying to manage two deeply troubled blocs with demographic crises: a poor sphere to the East where a fragile rule of law is breaking down in one country after another; and a heavily indebted bloc in the South that is trapped in deflation and labour hysteresis, and has yet to claw back its lost competitiveness within the structure of monetary union.
The index shows that EU countries are on average less free than other countries with a comparable per capita income and level of development, an indictment that should give cause for thought. Several of them are disasters.
Greece is ranked “mostly unfree” and is deteriorating five years after it crashed into the arms of the Troika, which claimed to be pushing through reforms to make the country more efficient, transparent, modern and competitive – but was in reality collecting debts for northern creditors under false guise.
---- A third of the union shares our economic philosophy. Two thirds do not. The EU is patently not an optimal political and economic area. It continues to exist only out of inertia.

“We all know what to do, but we don’t know how to get re-elected once we have done it.”

Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.

At the Comex silver depositories Monday final figures were: Registered 28.53 Moz, Eligible 127.71 Moz, Total 156.24 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
The usual suspects again today. Yet another get rich quick Chinese Ponzi scheme goes down.

China police arrest 21 over $7.6 bln online financial scam

Mon Feb 1, 2016 12:31am EST
Chinese police have arrested 21 people involved in the operation of peer-to-peer (P2P) lender Ezubao, the official Xinhua news agency said on Monday, over an online scam it said took in some 50 billion yuan ($7.6 billion) from about 900,000 investors.
Ezubao was a Ponzi scheme, the Xinhua report said, and more than 95 percent of the projects on the online financing platform were fake.
Among those arrested were Ding Ning, the chairman of Yucheng Group, which launched Ezubao in July 2014.
It was not possible to reach Ezubao officials for comment and it was not clear if Ding had legal representation.
Ezubao's website has been shut down and it appeared Yucheng Group's Beijing office had been closed when Reuters reporters visited before Monday's Xinhua report.
Chinese police said they had sealed, frozen and seized the assets of Ezubao and its linked companies as part of investigations into China's largest P2P online platform by lendinghttp://images.intellitxt.com/ast/adTypes/icon1.png figures.
The Ezubao case has underscored the risks created by China's fast-growing $2.6 trillion wealth managementhttp://images.intellitxt.com/ast/adTypes/icon1.png product industry. Many products are sold through loosely regulated channels, including online financial investment platforms and privately run exchanges.
($1 = 6.5752 Chinese yuan renminbi)

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.

Ludwig von Mises.

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?

Nanosheet growth technique could revolutionize nanomaterial production

Date: January 30, 2016

Source: University of Wisconsin-Madison

Summary: Materials scientists believe the tiny sheets of the semiconductor zinc oxide they're growing could have huge implications for the future of a host of electronic and biomedical devices.
After six years of painstaking effort, a group of University of Wisconsin-Madison materials scientists believe the tiny sheets of the semiconductor zinc oxide they're growing could have huge implications for the future of a host of electronic and biomedical devices.
The group -- led by Xudong Wang, a UW-Madison professor of materials science and engineering, and postdoctoral researcher Fei Wang -- has developed a technique for creating nearly two-dimensional sheets of compounds that do not naturally form such thin materials. It is the first time such a technique has been successful.
The researchers described their findings in the journal Nature Communications on Jan. 20.
Essentially the microscopic equivalent of a single sheet of paper, a 2-D nanosheet is a material just a few atoms thick. Nanomaterials have unique electronic and chemical properties compared to identically composed materials at larger, conventional scales.
"What's nice with a 2-D nanomaterial is that because it's a sheet, it's much easier for us to manipulate compared to other types of nanomaterials," says Xudong Wang.
Until now, materials scientists were limited to working with naturally occurring 2-D nanosheets. These natural 2-D structures include graphene, a single layer of graphite, and a limited number of other compounds.
Developing a reliable method to synthesize and manufacture 2-D nanosheets from other materials has been a goal of materials researchers and the nanotechnology industry for years.
In their technique, the UW-Madison team applied a specially formulated surfactant -- a detergent-like substance -- onto the surface of a liquid containing zinc ions.
Due to its chemical properties, the surfactant assembles itself into a single layer at the surface of the liquid, with negatively charged sulfate ions pointed in the direction of the liquid. Those sulfate ions draw the positively charged zinc ions from within the liquid to the surface, and within a couple hours enough zinc ions are drawn up to form continuous zinc oxide nanosheets only a few atomic layers thick.

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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