Baltic Dry Index. 406 +05 Brent Crude 40.70
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
Brexit Quote of the Day.
“Oh,
help!’ said Cameron. ‘I’d better go back.’ ‘Oh, bother!’ said Cameron. ‘I shall
have to go on.’ ‘I can’t do either!’ said Cameron. ‘Oh, help and bother!”
David
Cameron, with apologies to A.A. Milne, and Winnie-the-Pooh
With
much of the world on vacation today, traditionally my blog gets its lowest viewing
figure of the year today. Never mind. A little light reading anyway. Up first,
Project Fear and Smear. With Brexit, we are told, GB is too small and insignificant
to go it alone. At the same time, Project Fear and Smear says that if John Bull
leaves the EUSSR, all hell will break out in the rEUSSR and globally. By the
time June 23rd comes round Project Fear and Smear will be saying the
sun will stop shining too.
Mapped: how the eurozone will suffer after a Brexit
Mehreen Khan25 March 2016 •
10:31am
The eurozone is set to suffer a substantial economic blow if Britain
votes to leave the European Union, economists have warned.
Up to 0.3pc of eurozone GDP will be wiped off the single currency's 19
economies in less than two years, Dutch bank ING calculates, noting that any
prolonged political fallout from a Brexit could cause much "greater and
longer lasting" damage to the bloc in the long-term.
Ireland would see the biggest economic contraction in the event a
Brexit, with cumulative growth down by as much as 1.1pc at the end of
2017, following this summer's referendum, said ING. The adverse impact on
Ireland is almost as much as that estimated for the UK economy which could
shrink by 1.2pc until 2017.
Malta, the Netherlands, Belgium and Luxembourg would also a suffer
substantial hit from a British exit with growth lower by between 1pc and
0.7pc.
Germany - the eurozone's largest economy - is in line to suffer a 0.5pc
GDP contraction, with France at 0.4pc and Italy the least affected at
-0.3pc.
Falling exports, weaker investment and a shift in the direction of EU
economic policy away from free market reforms, would all combine to create a sizeable
adverse shock to the continent, said Peter Vanden Houte and Carsten Brzeski,
economists at ING.
In the short-term, a sharp depreciation in the pound - which could fall
as low as €0.90 against the euro - would crimp eurozone exports to the UK, with
small trading nations such as Ireland, Belgium and the Netherlands suffering
the biggest losses to trade.
Trade with Britain is responsible for creating around two million jobs
across the eurozone, accounting for 1.5pc of all employment, said the Dutch bank.
----ING's warning comes as Swiss asset-manager
Unigestion said a Brexit would prove "more detrimental for the European
Union and the eurozone than for the UK".
Brexit would be “first actual step back in the European construction
process that started in 1957", said the Geneva-based fund which manages
£16.3bn in assets.
“If there is one consequence investors should anticipate out of the
Brexit situation, it would be renewed questioning of the viability of the
European construction as it sits today", said Unigestion.
More
Elsewhere, it’s harder and harder to ignore what seems to be the next recession arriving. When the market accepts that a new recession is here, the bottom will fall out of the central bankster’s final bubble.
Behind U.S. GDP Data Is Reason for Recession Worry: Weak Profits
March 25,
2016 — 4:42 PM GMT
On the face of it, the latest government update on how the U.S. economy
performed in the fourth quarter looked a bit more encouraging. Growth was
revised to a 1.4 percent annualized pace from a previously estimated 1 percent,
and the adjustment to gross domestic product was for a good reason -- consumer
spending rose more than previously thought.
Yet beyond the headline number, there is a reason for some concern.
Corporate profits plunged 11.5 percent in the fourth quarter from the year-ago
period, the biggest drop since a 31 percent collapse at the end of 2008 during
the height of the financial crisis. For 2015 as a whole, pretax earnings fell
3.1 percent, the most in seven years, according to the Commerce Department.
That’s “bad news,” said Nariman Behravesh, chief economist for IHS Inc.
in Lexington, Massachusetts. History shows that when earnings fall, the economy
often follows them downward into recession as profit-starved companies cut back
on hiring and investment.
There
are, however, some caveats to such a gloomy conclusion. Last quarter’s numbers
were unusually depressed by a $20.8 billion penalty payment by BP Plc to settle
claims over the 2010 oil spill in the Gulf of Mexico. Taking that into account,
earnings fell about 7.6 percent, according to Bloomberg calculations. That’s
still weak but not as bad as the 11.5 percent slump.
----Jesse Edgerton, an economist with
JPMorgan Chase & Co. in New York, was less sanguine. Yes, the poor earnings
outturn was due to energy companies struggling with lower oil prices and
manufacturers hit by a strong dollar, he said.
"But it also likely reflects the beginnings of a profit-margin
squeeze driven by tighter labor markets, rising wages and weak
productivity," he added in an e-mail to clients. And that, he suggested,
is something to fear.
More
It Took Only a Month for Funds to Grow Wary of a Copper Rally
March 27, 2016 — 9:00 PM BST Updated on March 28, 2016 — 5:15 AM BST
It’s been barely a month since investors first started betting on a
copper rally, and they’re already on the retreat.
Money managers cut their wagers on price gains for a second week,
pulling back just before futures capped the worst slump in a month. Tuesday’s
attacks in Brussels sapped confidence in the global growth outlook, while a
recovery for the dollar weighed on demand for commodities as alternative
assets.
Copper has dropped about 20 percent in the past year. While Glencore Plc
and Freeport-McMoRan Inc. have reduced production, traders are concerned that
the industry’s cuts haven’t gone deep enough. More than 4.5 million metric tons
of additional mine capacity is planned to come online by 2020, and most
producers haven’t changed their plans to expand even in the face of lower
prices, according to an analysis by Bloomberg Intelligence.
“We’ve had a little bit of a rally in copper, and that’s just linked to
the changes in expectations as it relates to the dollar,” said Kevin Caron, a
Florham Park, New Jersey-based market strategist and portfolio manager who
helps oversee $180 billion at Stifel Nicolaus & Co. “We have not yet seen a
turn in terms of global demand. We haven’t seen any kind of fundamental change
in supply and demand characteristics of copper.”
More
At
the Comex silver depositories Thursday final figures were: Registered 32.29 Moz, Eligible 123.55 Moz, Total 155.84 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
While in Europe, Deutsche Bank spars with Italy’s
banks for the role of becoming “the next Lehman,” in America and obscure
pharmaceutical company with some 30 billion of debt that looks about to go into
default, seems to have trumped them, and no “the Donald” won’t be coming to the
rescue. If Valeant Pharmaceuticals is in fact a “pharmaceutical Enron,” no one
is coming to the rescue of a sophisticated scam. Thirty billion of debt will go
poof, along with most of the shares. With 88% of the shares held by hedge
funds, mutual funds and institutional investors, the collateral damage looks to
be vast.
It’s No longer A Prediction—-The Crash Of Valeant Means The High Yield Collapse Is Here
by Contributor • March 25, 2016
----
Until last
year, most folks had never heard of Valeant Pharmaceuticals (VRX).
That all
changed when a Wall Street Journal report made the company a “poster
child” for an outrageous new trend: companies buying the rights to existing
drugs and treatments, then immediately jacking up their prices.
The report
earned the company widespread criticism and even congressional inquiries, but
it didn’t stop the stock from hitting an all-time high of $264 per share last
August.
Unfortunately,
Valeant’s problems were just starting…
Last fall,
questions began to surface about the company’s accounting and business
practices.
In simple
terms, it appears the company may have tried to hide its relationship with a
smaller, specialty pharmaceutical company in order to increase insurance
company reimbursements.
All you
really need to know is that these were serious allegations.
Several
short-sellers published reports alleging outright fraud. One in particular went
so far as to call the company a “pharmaceutical Enron.”
The news got
even worse last month…
On February
23, Valeant finally admitted it might have to restate prior-year earnings after
an internal review “raised questions about its accounting practices.”
The
following week, the company officially announced it was under investigation by
the Securities and Exchange Commission (“SEC”).
----
The company
also said it would be unable to file its 2015 “Form 10-K” – an annual, audited
report of financial performance required by the SEC – by that week’s deadline,
and that it didn’t expect to be in a position to file it within the SEC’s
15-day extension period.
That brings
us to this week… Shares of Valeant suffered an incredible crash, dropping about
60%.
You see,
Tuesday – March 15 – marked the end of that extension period. And as predicted,
Valeant has now officially missed the deadline to file its 10-K.
There is now
a very real chance that Valeant could default on its $30 billion in debt… and
set off the next phase of the global credit crisis Porter has been warning
about for months.
Failure to
meet this extension means Valeant is now in breach of its bond agreements, or
“covenants.” Bondholders can now legally deliver a notice of default. According
to the Wall Street Journal, the company now has until April 29 to file
the report or it will officially default.
----
While we
can’t know exactly what will happen if Valeant defaults on its $30 billion in
debt, plenty of signs warn the “contagion” could be massive.
Let’s start
with Valeant shares…
As we
mentioned, the stock plunged about 60% this week. It has now fallen nearly 90%
from its all-time high last August.
But you may
be surprised to learn that despite clear warning signs for weeks that the
company would likely miss this week’s deadline… Valeant was still one of the
most widely held stocks on Wall Street.
Believe it
or not, an incredible 88% of Valeant shares were held by hedge funds, mutual
funds, and other institutional investors. There’s simply no telling
what kind of ripple effects could be created if these holders are forced to
raise cash and sell other positions to meet margin calls or investor
redemptions.
----But it’s
not just Valeant shares that are concerning…
More
Sprout Investors Say Valeant Overcharging for Female Libido Pill
March 25,
2016 — 3:13 PM GMT Updated on March 26, 2016 — 12:12 AM GMT
Investors in Sprout, the female libido pill maker bought by Valeant
Pharmaceuticals International Inc. for $1 billion last year, said Valeant has
failed to successfully commercialize the treatment by setting the price too
high and neglecting to market it, putting the drugmaker at risk of violating
the merger agreement.The group, representing all Sprout shareholders at the time of the acquisition, sent Valeant a letter on March 14 requesting materials showing that the drugmaker can fulfill its obligations under the deal going forward. Among the documents, the investors are seeking evidence that Valeant plans to spend $200 million for marketing and research and development for 2016 and half of 2017, as part of the agreement. They also ask for assurance that Valeant will keep a sales force of 150 to distribute the drug, called Addyi, which has posted disappointing sales since its introduction five months ago.
“Valeant predatorily priced Addyi at $800 a month even though Sprout had established a price point of approximately $400 a month for the drug based on market research,” the investor group said in the letter. “As a result of this predatory pricing, insurance companies refused to cover the drug, which has led to the drug not being affordable for millions of women.”
Valeant has received the letter and will respond in due course, spokeswoman Laurie Little said in an e-mail. “While confidentiality obligations under the merger agreement prohibit us from commenting on specific contractual terms, Valeant intends to comply with all of its obligations under our agreement with the former shareholders of Sprout, including as they relate to marketing spend, number of sales reps, and post-marketing studies.”
More
Brexit
Quote of the week.
Damn your principles! Stick to your
party.
D. Cameron, with apologies to Benjamin Disraeli.
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?
Vast Internet Failure Simulator Created With U.K. Government
March 24,
2016 — 3:33 PM GMT
A U.K. startup has teamed up with the British government to create what
it believes is the most complete simulation ever of how the Internet works, and
plans to make the code available to researchers.
The model is intended to be used to find weak points in the Internet’s
infrastructure and to simulate the effects of a large-scale network failures,
U.K. company Improbable announced Thursday.
“This will enable businesses, institutions and even countries to become more
resilient in an age of exponential vulnerability online,” Improbable said in a blog post.A number of large-scale Internet disruptions have occurred with unpredictable and far-reaching consequences in recent years. In 2008, an Internet service provider in Pakistan accidentally cut off access to YouTube for a large portion the world by misconfiguring a single server. That same year, two critical underwater fiber-optic cables in the Mediterranean Sea were damaged, causing serious network outages for users in Egypt, India as well as parts of the Persian Gulf and Central Asia. In 2013, one of the largest distributed denial of service attacks in history targeted the non-profit company Spamhaus, making Internet access slow or impossible for millions of ordinary people in the process.
“A simulation like this could be used to investigate these kinds of failures and find the routes most likely to be affected,” Improbable said. “Perhaps there are a few key routes we could protect that would mitigate the effects of such failures.”
Improbable, which was founded in 2012 and is backed by $20 million in funding from Silicon Valley venture capital firm Andreessen Horowitz, makes software that enables computer developers to create vast virtual worlds with an almost infinite number of variables. Its customers include computer gaming companies, financial services firms, governments and academic researchers.
A U.K. government team -- Improbable declined to say which department or agency they represented -- used Improbable’s SpatialOS software to construct a one-to-one scale model of the Internet’s entire backbone infrastructure.
Improbable said it took two programmers three days to build the entire simulation.
The model includes all major nodes, known as Autonomous Systems (AS),
owned by all the Internet Service Providers and major computing companies in
the world. With over 60,000 AS networks and more than half a million different
routes between them, managing all the possible ways of routing traffic has
become an ever bigger problem for Internet Service Providers.
Improbable’s system is able to mimic the operation of every AS
simultaneously and independently. Previously more in the realm of
supercomputers, Improbable distributes the workload across a public cloud
computing platform. “Doing this sort of simulation on a single server would be
almost impossible, but using our operating system we were able to distribute
this simulation over as many machines as we need to reach the full scale,”
Improbable said.
More
The monthly Coppock Indicators finished February
DJIA: 16517 -23 Down. NASDAQ: 4558 +45 Down. SP500: 1932 -17 Down.
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