Baltic Dry Index. 325 +03 Brent Crude 35.16
LIR Gold Target in 2019: $30,000. Revised due to QE programs.
Brexit odds checker. http://www.oddschecker.com/politics/british-politics/eu-referendum/referendum-on-eu-membership-result
In central banking as in diplomacy,
style, conservative tailoring, and an easy association with the affluent count
greatly and results far much less.
J. K. Galbraith.
It’s started, the professional dissembling, that is. The G-20 alchemists are meeting in Shanghai to try to turn lead into gold. Of course, few expect any such outcome, but that won’t stop most participants spinning like a whirling dervish, boasting like a drunken sailor, and promoting their brand of voodoo economics, like soon to be President Donald Trump.
Below, this morning’s opening gambits in China. Huffery-puffery ought to be good for another few hundred points in the stock markets. Our disconnected markets are all back on hopium again.
Asia shares nudge up as G20 talks, oil holds gains
Spreadbetters expect the positive momentum to extend to Europe, forecasting a higher open for Britain's FTSE .FTSE, Germany's DAX .GDAXI and France's CAC .FCHI.
Setting the tone for the Shanghai meeting of the Group of 20, China's central bank chief, Zhou Xiaochuan, said Beijing still had the room and tools to support the world's second largest economy.
---- The reaction in share markets was cautious. Shanghai stocks .SSEC added 0.5 percent, but the bounce looked unconvincing against Thursday's 6-percent slump.
MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS gained 0.8 percent, while South Korea .KS11 rose 0.2 percent. Japan's Nikkei .N225 gained 1 percent but could not quite sustain a two-week top.
The S&P 500 had already scored its highest close since early January after oil staged a turnaround to end Thursday 3 percent higher on speculation a March meeting of major producers might stabilize prices.
U.S. crude CLc1 was trying to hold those gains on Friday, dipping just 3 cents to $33.04 a barrel. Brent LCOc1 was 16 cents lower at $35.13.
On Wall Street, the Dow .DJI rose 1.29 percent, while the S&P 500 .SPX added 1.14 percent and the Nasdaq .IXIC 0.87 percent. Data showing a 4.9 percent rebound in U.S. durable goods orders underpinned the better mood.
More
http://www.reuters.com/article/us-global-markets-idUSKCN0VZ02D
Germany Opposes Any G-20 Fiscal Stimulus; Focuses on Reform
February 26, 2016 — 3:30 AM GMT
Germany’s finance minister opposed any fiscal stimulus plan from the Group
of 20, whose top economic officials gather Friday, and instead sought to focus
on structural reforms to strengthen national growth rates.Wolfgang Schaeuble, speaking hours before meeting with his counterparts from the G-20 developed and emerging markets, also said that the space for monetary policy has been exhausted. He warned that using debt to fund growth just leads to "zombifying" economies.
"Talking about further stimulus just distracts from the real tasks at hand," Schaeuble said at a conference in Shanghai. German policy makers "do not agree on a G-20 fiscal stimulus package, as some argue in case outlook risks materialize."
Schaeuble’s stance potentially puts him in conflict with other G-20 members. Treasury Secretary Jacob J. Lew said in an interview before heading to Shanghai that the U.S. wants a more serious commitment from other G-20 nations to use monetary policy, fiscal measures and structural reforms to stoke demand. China’s finance chief said that his nation for its part will be expanding its fiscal deficit.
More
http://www.bloomberg.com/news/articles/2016-02-26/germany-opposes-any-g-20-fiscal-stimulus-focuses-on-reform
Carney Warns G-20 Against `Zero Sum Game' of Negative Rates
February 26, 2016 — 12:05 AM GMT Updated on February 26, 2016 — 5:00 AM
GMT
Mark Carney warned his colleagues at major central banks against getting
embroiled in a currency war by pushing interest rates too low, saying targeting
weaker exchange rates only causes problems for the world economy.In a speech at the start of a two-day gathering of Group of 20 finance ministers and central bankers in Shanghai, the Bank of England governor said nations can’t simply export their problems through currency depreciation and that there is “no free lunch.”
"It is critical that stimulus measures are structured to boost domestic demand, particularly from sectors of the economy with healthy balance sheets," Carney said in a speech in Shanghai Friday. "There are limits to the extent to which negative rates can achieve this."
Weak growth and muted inflation pressures have pushed central banks around the world to cut interest rates below zero. While G-20 meetings have usually agreed on the need to refrain from competitive devaluations, it’s become a more pressing issue with about a quarter of global output now produced in economies where rates are, as Carney put it, “literally through the floor.”
“For monetary easing to work at a global level it cannot rely on simply moving scarce demand from one country to another,” Carney said. “For the world as a whole, this export of excess saving and transfer of demand weakness elsewhere is ultimately a zero sum game.”
Investor concern about the ability of monetary authorities to boost demand has helped spur market turmoil this year. Carney said that while it’s a “myth” that central banks are out of monetary-policy ammunition, G-20 leaders need to urgently co-ordinate supply-side initiatives as they are falling short on previous pledges.
“Since the start of the year, risk sentiment in financial markets has deteriorated sharply, stemming in large part from a renewed appreciation of weak medium-term global growth prospects accompanied by marked downside risks,” Carney said. “The global economy risks becoming trapped in a low growth, low inflation, low interest-rate equilibrium.”
The Bank of Japan adopted negative interest rates this year and the European Central Bank has indicated it may ramp up its stimulus next month, with one option being cutting its deposit rate further below zero.
More
http://www.bloomberg.com/news/articles/2016-02-26/carney-warns-g-20-against-zero-sum-game-of-negative-rates
But lookout below when it all goes terribly wrong, and we’re not talking Brexit, which for the moment is under attack from an army of orchestrated scare stories.
Citi: Risk of global recession rising
25/02/2016
The risk of the global economy falling into a recession is rising as
fundamentals remain poor, analysts at Citigroup said in a note Wednesday.
"We are currently in a highly precarious environment for global
growth and asset markets after two to three years of relative calm,"
Citigroup said, noting that global growth was "unusually weak" in the
fourth quarter at around 2.0 percent on-year.
"The most recent deterioration in the global outlook is due to a
moderate worsening in the prospects for the advanced economies, a large
increase in the uncertainty about the advanced economies' outlook (notably for
the U.S.) and a tightening in financial conditions everywhere," the bank
said.
At the same time, fundamentals remain poor, including concerns about a
structural and cyclical slowdown in China and its "unsustainable"
currency regime, excessive leverage and rising regional risks, such as the risk
the U.K. may exit the European Union, it said.
To be sure, Citigroup is defining a global recession as growth below 2
percent, differing significantly from the usual requirement of gross domestic
product (GDP) falling for two consecutive quarters.
More
Nikkei 225 in `Eerie' Parallel to Lehman Prelude in 2008: Chart
February 25,
2016 — 2:56 AM GMT
Japan’s
Nikkei 225 gauge is tracing chart patterns seen in the 12 months
through April 2008. A series of Federal Reserve rate cuts that began in
September 2007 appeared too late, Norihiro Fujito, a strategist at Mitsubishi
UFJ Morgan Stanley Securities, says in an interview today. The Nikkei fell
36% in the remaining eight months of 2008. The “eerie” parallel is unnerving,
and may continue should U.S. and Japanese policy makers take the wrong actions,
he said, referring to the recent Fed rate hike and a planned increase in
Japan’s consumption tax.
Brexit Thought of the Day.
"Should
you find yourself in a chronically leaking boat, energy devoted to changing
vessels is likely to be a more productive than energy devoted to patching
leaks."
Warren Buffett.
Brexit Quote of the Day.
Damn your principles! Stick
to your party.
D. Cameron with apologies to
Benjamin Disraeli.
At the Comex silver depositories Thursday final figures were: Registered 25.30 Moz, Eligible 130.56 Moz, Total 155.86 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Yesterday, suddenly the tide went out for Japan’s
Sharp. Is Sharp another Japanese Olympus?
"Only when the tide goes out do you discover who's been
swimming naked."
Warren Buffett.
Foxconn deal to buy Japan's Sharp in doubt after last-minute hitch
Taiwan's Foxconn put its takeover of electronics maker Sharp Corp on
hold on Thursday after discovering previously undisclosed liabilities, sources
said, throwing into doubt what was set to be the biggest takeover by a foreign
firm in Japan's technology sector.
Loss-making Sharp announced earlier in the day that it had agreed to be
bought by Foxconn, a contract manufacturing firm that is a major Apple Inc
supplier.
But, in a separate statement issued just hours later, Foxconn said it
would not sign until it had clarified terms in a "new key document"
from Sharp. It did not elaborate.
Two sources with direct knowledge of the matter said the Japanese group
had contingent liabilities that amounted to "hundreds of billions of
yen".
That issue would have to be resolved before a deal could be finalised,
said the sources, who spoke on condition of anonymity as the talks are
confidential.
The sources did not elaborate on the nature of the liabilities or the
exact amount. Reuters has not seen a copy of the document.
A spokesman for Foxconn, known formally as Hon Hai Precision Industry Co
Ltd, declined to comment on the issue. Sharp also declined to comment.
The 11th hour delay throws into doubt a deal that would have marked the
conclusion to five years of courting by Foxconn founder and billionaire Terry
Gou and the opening of Japan's insular tech sector to foreign investment.
The loss-making display maker said earlier in the day that it would
issue around $4.4 billion worth of new shares to give Foxconn a two-thirds
stake. Foxconn's investment is set to total more than 650 billion yen ($5.8 billion),
a separate source familiar with the matter said.
If a deal does go through, it would boost Foxconn's position as Apple
Inc's main contract manufacturer and enable Sharp to start mass-producing
organic light-emitting diode (OLED) screens by 2018, around the time Apple is
expected to adopt the next-generation displays for its iPhones.
Foxconn sees ownership of Sharp as a way to better compete with Asian
rivals such as Samsung Electronics Co.
"Sharp has the technology
to build
out the components to compete with Samsung as an Apple supplier, which means
that with Sharp under its umbrella Foxconn can help Apple wean itself off
Samsung," said Gavin Parry, managing director of Parry International
Trading, a brokerage in Hong Kong.
to build
out the components to compete with Samsung as an Apple supplier, which means
that with Sharp under its umbrella Foxconn can help Apple wean itself off
Samsung," said Gavin Parry, managing director of Parry International
Trading, a brokerage in Hong Kong.
"This gives Foxconn better pricing power with Apple," he
added.
Before Foxconn's late statement, Sharp's stock tumbled to end 14 percent
lower as the share dilution looked larger than expected, with traders noting
that the proposed deal included the issuance of a class of shares that would be
convertible next year.
Olympus scandal
The Olympus scandal was precipitated on 14 October 2011 when British-born Michael Woodford was suddenly ousted as chief executive of international optical equipment manufacturer, Olympus Corporation. He had been company president for six months, and two weeks prior had been promoted to chief executive officer, when he exposed "one of the biggest and longest-running loss-hiding arrangements in Japanese corporate history", according to the Wall Street Journal.[2] Tsuyoshi Kikukawa, the board chairman, who had appointed Woodford to these positions, again assumed the title of CEO and president.[3][4] The incident raised concern about the endurance of tobashi schemes, and the strength of corporate governance in Japan.Apparently irregular payments for acquisitions had resulted in very significant asset impairment charges in the company's accounts, and this was exposed in an article in the Japanese financial magazine FACTA and had come to Woodford's attention. Japanese press speculated on a connection to Yakuza (Japanese organised crime syndicates).[5][6] Olympus defended itself against allegations of impropriety.
Despite Olympus' denials, the matter quickly snowballed into a corporate corruption scandal[7] over concealment (called tobashi) of more than 117.7 billion yen ($1.5 billion) of investment losses and other dubious fees and other payments dating back to the late 1980s and suspicion of covert payments to criminal organisations.[6][8][9][10] On 26 October, Kikukawa was replaced by Shuichi Takayama as chairman, president, and CEO. On 8 November 2011, the company admitted that the company's accounting practice was "inappropriate" and that money had been used to cover losses on investments dating to the 1990s. The company blamed the inappropriate accounting on former president Tsuyoshi Kikukawa, auditor Hideo Yamada and executive vice-president Hisashi Mori.
By 2012 the scandal had developed into one of the biggest and longest-lived loss-concealing financial scandals in the history of corporate Japan;[2] it had wiped 75–80% off the company's stock market valuation,[11] led to the resignation of much of the board, investigations across Japan, the UK and US, the arrest of 11 past or present Japanese directors, senior managers, auditors and bankers of Olympus for alleged criminal activities or cover-up,[12] and raised considerable turmoil and concern over Japan's prevailing corporate governance and transparency [13] and the Japanese financial markets. Woodford received a reported £10 million ($16 m) in damages from Olympus for defamation and wrongful dismissal in 2012;[11][14] around the same time, Olympus also announced it would shed 2,700 jobs (7% of its workforce)[15] and around 40 percent of its 30 manufacturing plants by 2015 to reduce its cost base.[16]
More
"On
the whole central banksters want to be good, but not too good, and not quite
all the time.”
With
apologies to George Orwell.
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?
N America’s infant vanadium-redox flow battery market looking for a champion
24th
February 2016
Toronto
(miningweekly.com) – While several industry players are jostling to take
advantage of the budding North American vanadium-redox flow battery (VRB)
market, barriers to entry, such as raw material cost and equipment
availability, are still issues, making input costs prohibitive.
“The
industry is still looking for a champion. If battery producers can commercialise
economic VRB production, there’s no reason this technology couldn’t become a
major segment of the utility battery market in the longer term,” Benchmark
Mineral Intelligence consultant Andrew Miller explained to Mining Weekly
Online.
He saw a
bright future for VRBs in the stationary storage market; however, this would
ultimately hinge on production costs.
VRB showed
that it had significant potential in this part of the market and was touted by
World Economic Forum founder Klaus Schwab in a presentation during the recent
event held in Davos, Switzerland. He underlined that batteries were core to the
fourth industrial revolution. ". . .
[E]nergy
storage and batteries that will make this possible on a mass scale, are key to
a fourth industrial revolution," he said on February 1.
In the US
alone, grid connected energy storage had been estimated as a $150-billion
opportunity. Goldman Sachs also recently estimated that VRBs were 50% lower in
cost than lithium-ion batteries on a level cost of storage basis.
According to
Navigant Research, VRBs were expected to make up almost 20% of global storage
markets; growing at more than 35% through to 2025.
The VRB is a
type of rechargeable flow battery that employs vanadium ions in different
oxidation states to store chemical potential energy. The VRB leveraged the
ability of vanadium to exist in solution in four different oxidation states and
used this property to make a battery that had just one electroactive element,
instead of two.
VRBs, which
were inclined to be bulky in size, were most suitable for grid energy storage
solutions, such as when connected to renewable energy plants or used to shave
peak power costs.
“[VRB]
hasn’t yet overcome the barriers to adoption, which lithium-ion cell producers
are addressing at the moment with mass-scale capacity expansions and [a drive
to bring] down the cost of production,” noted Miller.
The scarcity
of components and inputs, such as the vanadium electrolyte (VE) had, in some
cases, prompted battery developers to lease their vanadium in the battery,
rather than selling it outright, as it could also be recovered and recycled,
which was one of the significant benefits of the technology.
“We at
Benchmark see the utility storage market where electric vehicles were five
years ago. The industry is still relatively immature and it’s unclear how the
technologies here will evolve over the coming years. What we think is certain
is that the range of technologies will be much more diverse than in electric
vehicles – providing an opportunity for VRB producers,” he advised.
Miller said
that lithium-ion had become the predominant technology in mobile storage
because it is best fit for the use: lightweight and dense enough to carry the
required energy for a vehicle.
However, in
utility energy storage applications, this would not be an issue, as the
batteries did not move – they were stationary. “So while the falling costs of
lithium-ion cells could potentially open up a massive new market, it may not be
the most efficient technology for stationary applications,” said Miller.
more
more
Another
weekend, and the G-20 have assembled in Shanghai to definitively decide once
and for all, just how many angels can dance on the head of a 21st
century pin. Whether the Dow can make 30,000 is riding on it in our ever more
disconnected world of crony casino capitalism. Have a great weekend everyone.
Be sure to check in for the weekend update.
Of
the billionaires I have known, money just brings out the basic traits in them.
If they were jerks before they had money, they are simply jerks with a billion
dollars.
Warren
Buffett.
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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