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.
More
http://www.bloomberg.com/news/articles/2016-02-01/s-p-lowers-shell-s-rating-puts-other-oil-majors-on-watch
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”.More
http://www.marketwatch.com/story/a-big-reason-its-too-late-for-opec-to-cut-production-2016-02-01
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.”
More
http://www.bloomberg.com/news/articles/2016-02-01/manufacturing-in-u-s-contracted-in-january-for-a-fourth-month
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.
Morehttp://www.telegraph.co.uk/finance/12134050/EU-should-be-broken-up-finds-world-index-of-economic-freedom.html
“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
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 lending
figures.
figures.
The Ezubao case has underscored the risks created by China's
fast-growing $2.6 trillion wealth management product
industry. Many products are sold through loosely regulated channels, including
online financial investment platforms and privately run exchanges.
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.
More
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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