Thursday, 11 February 2016

Ship Shape and “L” Shape.

Baltic Dry Index. 290 - 01        Brent Crude 30.66

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

In 1744, the Virginia and Maryland coffee house in Threadneedle Street, London, changed its name to Virginia and Baltick, to more accurately describe the business interests of the merchants who gathered there. Today's Baltic Exchange has its roots in a committee of merchants formed in 1823 to regulate trading and formalize the exchange of securities on the premises, which by then had moved to the Antwerp Tavern.[2] The first daily freight index was published by the Baltic Exchange in January 1985.[3]

Just how bad is the global slowdown? Worse than during the Great Recession, says leading global shipping company Maersk. The Baltic Dry Index has plunged from a high of 11,793 on May 20th, 2008 to yesterday’s all time record low of 290. The BDI is signalling a global depression comes next. While 290 or thereabouts might well be as low as the BDI sinks, don’t expect any “V” shaped recovery. Global trade seems more likely to “L” shape.

Maersk warns global trade now worse than during financial crisis

February 10, 2016 9:45 am
AP Møller-Maersk warned that it was facing conditions significantly worse than the financial crisis as it plunged to a large net loss as global trade growth ground to a halt last year.

The Danish shipping-to-oil conglomerate has been hit by the slump in both petroleum prices and container freight rates in what its chief executive described as a “massive deterioration” in its business.

Nils Andersen told the Financial Times: “It is worse than in 2008. The oil price is as low as its lowest point in 2008-09 and has stayed there for a long time and doesn’t look like going up soon. Freight rates are lower. The external conditions are much worse but we are better prepared.”

Maersk’s shares, which have nearly halved in the past 10 months, fell another 8 per cent on Wednesday morning to DKr7495.

Maersk owns the world’s largest container shipping company and is seen as a bellwether for global trade, which it estimated grew just 0-1 per cent last year against double-digit growth before the financial crisis. It forecast an increase of 1-3 per cent this year, still below its post-crisis estimate of 4-5 per cent growth.
Despite this, capacity in the container shipping industry increased 8 per cent in 2015 and Maersk, which still has 27 new ships on order, has cancelled its options to buy any more.

Mr Andersen said global trade conditions had been “abnormal” last year with imports to Europe, Brazil, Russia and west Africa all falling — the latter due to the slump in oil prices.

The Mining Industry Makes Oil Giants Look Great

February 10, 2016 — 10:01 PM GMT
When you find yourself in a hole, the saying goes, stop digging. A simple lesson that arguably has bypassed a mining industry that’s wiped out more than $1.4 trillion of shareholder value by digging too many holes around the globe. The industry's 73 percent plunge from a 2011 peak is far beyond the oil industry's 49 percent loss during the same time.

Just how long it will take for the world to erode bulging stockpiles of metals, coal and iron ore was the central debate at the mining industry’s biggest investment conference in Cape Town this week, which attracted more than 6,000 top executives, bankers, brokers, analysts, miners and reporters. Here's what they concluded.

The Worst Is Yet to Come

This year may be the worst yet with prices trending lower for longer, according to Anglo American Chief Executive Officer Mark Cutifani, who says his company should be better prepared “for the winter that inevitably comes after the summer."

----Gluts of everything from iron ore to copper are the main challenge for the industry. China’s slowest economic growth in a generation has led to oversupplies of metals, and for that, the industry is largely to blame, Cutifani said. The big cost of environmental cleanups after closing a mine is preventing closures and prolonging the downturn.
"Excess supply is awash in most commodities and as painful as it is, economically and rationally it needs to leave the market to create a long term sustainable future,” said Graham Kerr, CEO of South32 Ltd., the spin-off of BHP Billiton.

Gold, this year’s best performing commodity, is giving miners some hope. Its safe-haven status makes it immune to many of the forces that have weighed on industrial metals and bulk commodities.

Up next China, still busy on holiday celebrating the Lunar New Year. Black only gets blacker by the day, says China bear, hedge fund gambler Kyle Bass. Edinburgh was so impressed, they named a prominent rock after him.

Bass Says China Bank Losses May Top 400% of Subprime Crisis

February 10, 2016 — 4:15 PM GMT Updated on February 11, 2016 — 2:58 AM GMT
Kyle Bass, the hedge fund manager who successfully bet against mortgages during the subprime crisis, said China’s banking system may see losses of more than four times those suffered by U.S. banks during the last crisis.

Should the Chinese banking system lose 10 percent of its assets because of nonperforming loans, the nation’s banks will see about $3.5 trillion in equity vanish, Bass, the founder of Dallas-based Hayman Capital Management, wrote in a letter to investors obtained by Bloomberg. The world’s second-biggest economy may end up having to print more than $10 trillion of yuan to recapitalize banks, pressuring the currency to devalue in excess of 30 percent against the dollar, according to Bass.

----“What we are witnessing is the resetting of the largest macro imbalance the world has ever seen,” he wrote in the letter. “Credit in China has reached its near-term limit, and the Chinese banking system will experience a loss cycle that will have profound implications for the rest of the world.”

Bass said his hedge fund has sold most of its riskier assets since the middle of last year to position itself for 18 months of “various events that are likely to transpire along this long road to a Chinese credit and currency reset.” In an e-mailed response to questions, he said about 85 percent of his portfolio is invested in China-related trades.

“The problems China faces have no precedent,” Bass wrote in the letter. “They are so large that it will take every ounce of commitment by the Chinese government to rectify the imbalances. Risk assets will not be the place to be while all of this is happening.”

----Bass estimates the Chinese economy actually expanded last year at a slower pace than reported, about 3.6 percent, according to the letter. He estimates that of China’s $3.2 trillion in foreign-exchange reserves, about $2.2 trillion are liquid.

Yen, bonds, gold all gain at dollar's expense, stocks sag

Thu Feb 11, 2016 12:43am EST
Fresh cracks appeared in global markets on Thursday as investors sought the safety of Japanese yen, gold and top-rated bonds while dumping U.S. dollars on bets the Federal Reserve could be done raising interest rates.

Even the absence of Tokyo for a holiday could not stop the dollar from hitting a 15-month low on the yen, and gold finally broke major chart resistance to reach its highest since May.

Insatiable demand for U.S. Treasuries drove longer-term yields to one-year lows and flattened the yield curve in a way that has presaged economic recession in the past.

---- The flight from risk told on most Asian shares, with Hong Kong .HSI - a favourite channel for global investors to play China - diving 3.9 percent as investors there returned from the long Lunar New year holidays. Mainland China markets are closed all week.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS shed 1.4 percent, and South Korea .KS11 resumed with a 2.9 percent drop.
EMini futures for the S&P 500 ESc1 fell 0.5 percent.

Wall Street had ended Wednesday mixed after Fed Chair Janet Yellen sounded optimistic on the U.S. economy, but acknowledged risks from market turmoil and a slowdown in China.

Analysts took that to mean a hike in March was unlikely, but further tightening remained possible later in the year.

In oil news, lower for longer says BP. Be prepared for a tidal wave of oil patch bankruptcies.

BP CEO `Very Bearish' on Oil as Storage Tanks Are Filling Up

February 10, 2016 — 11:41 AM GMT Updated on February 10, 2016 — 12:43 PM GMT
BP is planning for oil prices to stay low for the first six months of the year and expects surplus production to only start diminishing when storage tanks fill up in the second half.
“We are very bearish for the first half of the year,” Chief Executive Officer Robert Dudley said at the IP Week conference in London Wednesday. “In the second half, every tank and swimming pool in the world is going to fill and fundamentals are going to kick in. The market will start balancing in the second half of this year.”
More than a year into a downturn sparked by OPEC’s decision to keep pumping to defend market share, prices are still 70 percent below their 2014 peak and companies are beset by plunging profits, dividend cuts and mass layoffs. The oil industry’s annual IP Week gathering in London has been dominated by warnings that the worst of the slump isn’t over.

Finally, in El Nino news, it’s ending, says the Japan Meteorological Agency. Just don’t expect relief too soon.

Japan says El Nino has weakened, weather to return to normal by summer

Wed Feb 10, 2016 12:11am EST
Japan's meteorology agency said on Wednesday that the El Nino weather pattern, which is often linked to heavy rainfall and droughts, had somewhat weakened and that the weather would likely return to normal by summer.
The Japan Meteorological Agency said last month that the El Nino phenomenon peaked between November and December, and that there was a strong possibility weather patterns would return to normal by summer
The El Nino - a warming of sea-surface temperatures in the Pacific - can trigger drought in Southeast Asia and Australia and floods in South America, hitting production of key foods such as rice, wheat and sugar.

What's with the hot weather, El Niño? O.C. breaking heat records

Feb. 9, 2016 Updated 10:09 p.m.
Is El Niño the little boy who cried wolf?
Just wait, the storms are coming, forecasters said in December. Then, the same in January. And as we head into mid-February, when the wet-weather storms were really supposed to start picking up, the record-setting heat – Santa Ana set a new high at 93 degrees Tuesday – has us scratching our heads, putting away our sweaters and reaching for our sunscreen.
But El Niño – which translates to “little boy” in Spanish – is here. It’s just not showing up in the form of pounding rainstorms as we expected.
“El Niño is happening. I’ve been telling everyone this,” said Larissa Johnson, hydrometeorological technician for the National Weather Service. “The biggest misconception I’m hearing – ‘Where is El Niño?’ It’s not a three-day storm or three-month storm. It’s a body of water that’s warmer than usual. It doesn’t dictate our weather; it affects different elements.”
Ask the big-wave surfers traveling the world chasing massive swells, and they’ll tell you El Niño is in full force. Check out snow resorts like Mammoth Mountain, and you’ll find more snow then they’ve had in years. People in Northern California will tell you they’ve had plenty of El Niño storms.
The lack of rain here has to do with the jet stream not traveling far enough south to give us wet weather, Johnson explains. That has kept the storms isolated to Northern California.
“Fifty to 100 miles away, it’s a completely different scenario,” she said. “You get people up north saying ‘Yeah, we’re getting a lot of rain.’”

"Indeed the temporary breaks in the market which preceded the crash were a serious trial for those who had declined fantasy. Early in 1928, in June, in December, and in February and March of 1929 it seemed that the end had come. On various of these occasions the [New York] Times happily reported the return to reality. And then the market took flight again. Only a durable sense of doom could survive such discouragement. The time was coming when the optimists would reap a rich harvest of discredit. But it has long since been forgotten that for many months those who resisted reassurance were similarly, if less permanently discredited.”

J. K. Galbraith. The Great Crash: 1929.

At the Comex silver depositories Wednesday final figures were: Registered 28.90 Moz, Eligible 128.37 Moz, Total 157.27 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today a break from the usual bent banksters, robbing Wall Street Squids, and lying politicians on the take. Today, Manhattan’s Ali Baba art world.  So you can’t tell your Rothko from your Avery, Klee, or Pei-Shen Qian? Come and join us at Sotheby’s. What’s the world coming to? Whatever happened to honour among thieves? Whatever happened to that “Chinese immigrant in Queens?”  “Multiform” anyone?
Yes, but is it art?

Fake-Rothko Trial Makes Stock Market Look Perfectly Sensible

February 9, 2016 — 10:00 AM GMT Updated on February 9, 2016 — 10:32 PM GMT
Today’s anticipated testimony by art dealer Ann Freedman, who sold dozens of fake paintings as president of the Knoedler & Co. gallery in New York, fell through when a Manhattan federal court judge unexpectedly dismissed the jury for the day shortly after the lunch break.
Freedman, who spent the past two weeks as a defendant in a $25 million fraud trial, was expected to testify for the plaintiffs, following a mid-trial settlement of the claim against her by Sotheby’s Chairman Domenico De Sole.
De Sole and his wife, Eleanore, sued Freedman for selling them an $8.3 million painting by Mark Rothko in 2004 that turned out to be a forgery painted by a Chinese immigrant in Queens. The De Soles also sued Knoedler, a once-prominent, now shuttered Manhattan gallery, and parent company 8-31 Holdings Inc. The De Soles settled with Freedman on Sunday, but the dealer’s testimony was anticipated as part of their ongoing dispute with Knoedler.
The trial is airing usually secretive details of high-end art transactions and making public the dicey nature of the authentication process. Witness testimony and court exhibits underscore how the market’s opacity can make it vulnerable to manipulation.

“At the time it didn’t cross my mind they were selling fake art,” De Sole told the jury last month. “I went to the best gallery in America.”

The trial, which began on Jan. 25, is the first public hearing from one of the biggest art frauds in recent history. From about 1994 to 2008, Knoedler allegedly sold dozens of forged paintings by such postwar artists as Rothko, Jackson Pollock and Willem de Kooning to collectors including hedge fund manager Pierre Lagrange; Jack Levy, a former global co-chairman of mergers and acquisitions at Goldman Sachs Group Inc.; and John Howard, chief executive officer of private equity fund Irving Place Capital. Having made $32.8 million in profit from the sales, according to testimony by a plaintiffs’ accountant, the gallery shuttered as claims from defrauded clients piled up.

Founded in 1846, Knoedler Gallery played a key role in selling masterpieces that established American museum collections, according to the Getty Research Institute. Clients included Andrew Mellon, Henry Clay Frick and Cornelius Vanderbilt. In 1971, the gallery was sold to collector Armand Hammer whose grandson, Michael Hammer, was its chairman when it closed in 2011.

Hammer, who heads 8-31, was scheduled to testify Tuesday afternoon. Freedman was set to take the stand after him, according to her attorney Luke Nikas.

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?

World's largest solar plant goes live; will provide power for 1.1M people

Feb 9, 2016 1:44 PM PT
The world's largest solar power plant, now live in Morocco, will eventually provide 1.1 million people with power and cut carbon emissions by 760,000 tons a year.

The $9 billion Noor Concentrated Solar Power (CSP) plant could eventually start exporting energy to the European market.

The Noor Concentrated Solar Power (CSP), paid for with funds approved by The World Bank, is located in the Souss-Massa-Drâa area in Morocco, about 6 miles from Ouarzazate town. It began operation on Thursday. While the World Bank and other development partners provided financial support, the Noor solar plant is a wholly Moroccan project.
With this bold step toward a clean energy future, Morocco is pioneering a greener development and developing a cutting edge solar technology," Marie Francoise Marie-Nelly, World Bank Country Director for the Maghreb, said in a statement. "The returns on this investment will be significant for the country and its people, by enhancing energy security, creating a cleaner environment, and encouraging new industries and job creation."
Overall, the new Noor CSP plant will increase Morocco's energy independence, create 1,600 jobs during construction and 200 jobs during the power plant's operation, and increase the installed capacity of solar power stations from 22MW in 2013 to 522MW in 2018, according to The World Bank.
The plant will be able to store solar energy in the form of heated molten salt, which allows for the production of electricity even at night.
Unlike concentrated photovoltaic solar power, CSP plants do not create electrical current through the photovoltaic effect, where particles of light (photons) break electrons free from atoms, generating a flow of electricity. Instead CSP uses either lenses or parabolic mirrors to concentrate the sun's light onto a small point where water or another substance is heated.
The heat is used to create steam, which runs a turbine that produces electricity. In the Noor CSP, concave mirrors focus on molten salt, heating it anywhere from 300 degrees to 660 degrees Fahrenheit.

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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