Baltic Dry Index. 396 +03 Brent Crude 39.10
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.
Dear
Cameron, utterly unspoilt by failure.
With
apologies to Noel Coward on Randolph Churchill.
Today
we focus on America, where following yesterday’s voting, it increasingly looks
like the next presidential election will be between the real estate mogul and
the incredibly, successful live cattle futures trader. The “wall builder,”
versus, the “hammer of Libya.”
Below,
the latest from yesterday’s voting. Below that, John Mauldin sums up what the next
President faces. David Stockman on what looks like an arriving recession.
Libya:
“we came, we saw, he died.”
Hilary
Clinton.
Trump Wins Three States as John Kasich Blocks Him in Ohio
March 16, 2016 — 12:01 AM GMT Updated on March 16, 2016 — 2:29 AM GMT
Donald Trump fell short of his goal of winning the two key states he
needed to clear most of the Republican presidential field, securing a huge
victory in Florida to knock out home-state Senator Marco Rubio before losing
Ohio to Governor John Kasich.
The split decision on Trump increased the possibility that the party
could be headed for a potentially chaotic national convention in Cleveland in
July. Trump also won Illinois and North Carolina, according to multiple
television networks.
The real estate mogul remains the dominant front-runner, but the lack of
an Ohio victory kept him from owning the night and the political narrative.
“We have to bring our party together,” Trump told supporters gathered at
his Mar-A-Lago Club in Palm Beach, Florida.
The voting was the first tangible measure of Trump’s standing since a
melee broke out Friday night in Chicago, after he abruptly canceled a rally
because of protests inside and outside the arena. The incident further
heightened unease among establishment Republicans desperately seeking a way to
stop him.
----The
other large state voting today, in what could prove to be the most
consequential primary balloting yet, is Missouri. Polls were also closed there,
but that state was too close to call, with Trump and Cruz in a tight race with
nearly half the vote counted.
More
Clinton Sweeps Sanders Across Four Primary States
March 16, 2016 — 12:03 AM GMT Updated on March 16, 2016 — 4:29 AM GMT
Hillary Clinton turned her sights on the general election and
Republican frontrunner Donald Trump Tuesday after decisive wins in the Florida,
Ohio, Illinois and North Carolina Democratic primaries strengthened her grip on
the party’s nomination.
The four victories on one of the most delegate-rich nights of the
Democratic presidential contest had her supporters confident that she would
emerge from Tuesday with a virtually insurmountable delegate lead over Bernie
Sanders. And even with the Missouri primaries outstanding, Clinton used her
victory speech in Florida to address a showdown with Trump in November.
“Tonight, it’s clearer than ever this may be one of the most
consequential elections of our lifetimes,” Clinton said at a rally in West Palm
Beach. “Our commander in chief has to be able to defend our country, not
embarrass it, engage our allies, not alienate them, defeat our adversaries, not
embolden them.”
More
An Open Letter to the Next President
By John Mauldin
| Mar 14, 2016
---- Dear Presidential Candidates:
In ten months and four days one of you will wake up as Mr. or Mrs.
President. After the fabulous fun of post-inaugural balls (I wonder if I’ll get
an invitation after this letter), you will walk into the Oval Office on
Saturday, January 22, and launch into your first 90 days in office, during
which you will want to deliver on as many of your promises as possible. But
instead of shadowboxing with hypothetical futures on a debate stage, you’re
going to be up against cold, hard reality.
My suspicion is that six months into your presidency you will begin to
wonder why you ever wanted this job, as the gulf deepens and widens between
what you wanted to do and what you can do without unintended consequences. To
make your job just a little more manageable, what I would like to do is take
you around the world and review some of the economic realities faced by our
global partners. For many of them, those realities are not pretty. They may be
far more limited in what they can do to respond to your proposed agenda than
either they or you would like.
We are going to fly, metaphorically speaking, from San Francisco and
head west, first to Japan and China, and then on around the world.
First, let’s do a quick overflight of the economic problems you will
have to deal with in various regions the world.
- Japan
Japan has run up a debt of almost 250% of GDP, and that monumental debt
is growing every year. Japan’s deficit stands at nearly 8% of GDP, the
equivalent of a $1.2 trillion deficit in the US. The country’s nominal rate of
GDP growth has remained almost flat for 25 years, the result of unrelenting
deflation. The Japanese 10-year bond market used to be one of the most liquid
in the world. Now, if the Bank of Japan is not in the market, there is
literally no trading. If the Bank of Japan were not buying bonds, interest
rates would rise precipitously; and the government of Japan would be bankrupt
in short order.
In order to avoid a deflationary depression, Japan is monetizing not
only its deficit but a great deal of its outstanding debt. This move has of
course pushed the Japanese yen down against the dollar – by some 40% in the
past few years. The problem is that Japan has no choice but to continue down
that path.
As an aside, most mainstream US economists (the very economists you will
likely turn to for advice) are telling Japan that it needs to do more
quantitative easing, not less. The yen is likely to become markedly weaker on
your watch; and, frankly, there is very little you can do about it without
sending Japan even further into recession/depression. Such an event in Japan
would have serious impacts on global growth and trade.
We’ll get into some details below as to what your options are.
- China
Like Japan, China has a massive debt problem. But unlike the people of
Japan, the majority of China’s citizens still live in abject poverty. In a
distortion of capitalism, China has built massive excess capacity in a number
of manufacturing industries and will now be forced to lay off millions of
people or plunge even deeper into the debt abyss. There are significant
outflows of Chinese currency as wealthier citizens look to get out of a
currency they are worried about.
China is at the point in its evolution where it must shift to a
consumer-driven economy, though that transition is nearly always tumultuous. In
short, Chinese leaders have much less room to maneuver than everyone might
wish.
- Australia
As China changes course from a manufacturing powerhouse to a
consumer-oriented nation, Australia is seeing its commodities industries
suffer. Plus, Australia’s housing market is priced very high by global
standards, and people have a large amount of debt attached to their homes.
While there are not many direct economic consequences for the United States,
Australia has been a reliable ally, and the Aussie economy is going to come
under pressure.
- The Middle East
The Middle East is always a nightmare for US presidents, but you are
going to inherit some especially nasty problems. The low price of oil is
putting immense pressure on national budgets. Some experts expect Saudi Arabia
to literally run out of money by the end of your term. Yes, Saudi leaders can
and probably will make adjustments, but the new economic restrictions are going
to impair their ability to be part of any coalition to bring stability to the
region. And the same problem affects most of our smaller but still important
allies in the Muslim world.
- Russia
Economically Russia is not as important as Japan, China, or Europe; but
geopolitically it certainly is. Russia simply cannot afford to let the oil
price remain below $40 or even $50. Any further downturns in the price of oil
will put enormous pressure on President Putin. Russia’s developing financial
crisis will continue to make that nation ever less predictable.
- Europe
Outside of domestic concerns, Europe is going to demand your greatest
focus. During your first term it is likely that Europe will descend into a
crisis that will force the EU either to break up or to mutualize and then
monetize its debts – which would then trigger enormous volatility in the
currency markets. The topic of massive nonperforming loans at Italian banks
(~20% of loans) will move to the forefront at the very beginning of your term
if not before. This will be a debt crisis much worse than we saw in Greece. Many
small and medium-sized German banks also have severe problems. And let’s not
forget France and Spain, which are teetering economically and politically.
Europe’s economic problems are only going to make the fallout from its
immigration crisis worse and severely limit the ability of our allies to join
us in a coalition to resolve crises elsewhere in the world. Be thankful Great
Britain is not in as dire a shape as Europe is; you may we ll need the Brits on
your side.
- The Americas
It is distinctly possible that Canada could roll over into recession
during your first term, and low-priced oil is certainly not helping Mexico,
either. The peso is down 50% since the middle of 2013. Brazil is a mess. Its
currency is also down 50% in less than four years, and there is no reason it
couldn’t fall further. Brazil is likely heading into its deepest recession in
over 100 years, which will drag down its neighbors.
- The United States
The US economy is growing by less than 2% annually, and there are
reasons to think the economy is slowing further, into the 1% range. We have
already waded through the third-longest recovery period in history without a
recession; and if by chance you manage to avoid a recession during your first
term, the current recovery will become the longest recession-free period in
American history. Given the worries I have already mentioned concerning the
rest of the world and its impact on us, it is likely that you will have to deal
with a recession. As part of your transition process you might want to think
about what a stimulus package would look like during a recession. Monetary
policy is clearly not going to be enough this time, but you can count on this
Fed to give you even more monetary stimulus.
A recession will mean that the US fiscal deficit blows out, and deficit
hawks are going to be very wary of fiscal stimulus after the last attempt in
2009–10, which produced very little in the way of measurable results. You will
have anti-recession options, but they are limited.
By the end of your first term, it is very possible that tax revenues
will cover only entitlement spending, the defense budget, and net interest,
meaning that any other parts of the budget will have to be borrowed. To avoid
that crisis, you will have to implement significant entitlement reforms or a
major tax increase. Either option will be painful, needless to say; and
unfortunately, the politicians who governed before you generally put off the
serious issues that are going to come to the fore on your watch. The
possibility of growing our way out of the budgetary problem, which is the usual
political answer, is not going to be realistic without significant tax,
entitlement, and regulatory reforms, all of which are controversial. Oh, and
income inequality and the pressure on jobs will likely worsen without a serious
change in course.
And you want this job why?
More
We
leave the last word the great David Stockman. This presidential election
campaign looks increasingly likely to be fought against a background of an
arriving recession.
Here Comes The Big Flush—–Recession Pending, Fed ‘Put’ Ending
by David Stockman •
Talk about sheep being led to the slaughter. The S&P 500 is up 11%
from its February 11th intra-day low (1812) because Wall Street still has
inventory to unload. That much is par for the course.
Yet the signs of an impending macroeconomic and profits implosion
are now so overwhelming that it is truly remarkable that there
are any bids left in the casino at all. This morning’s release of business
sales for January, for example, showed another down month and that
the inventory-to-sales ratio for the entire economy is now at 1.40X—–a
ratio last recorded in May 2009.
----Once upon a time, real economists, investors and traders knew that business sales, wages and profits are the heart of the matter. No longer. The self-referential sentiment surveys, financial conditions indices and bullish spin on Fed word clouds which animate today’s casino muffle the fundamentals almost entirely.
Yesterday on Bloomberg TV, for example, my downbeat view was challenged
with a chart showing that Goldman’s financial conditions index had perked up
during the last 5-weeks. Where, I was asked, is the recession?
How about the quarter century of history shown below? Business sales
reported this morning were down by 5.1% from their July 2014 cyclical peak.
Self-evidently, declines of that magnitude have occurred only twice since 1992,
and both of them bear the shaded imprint of recession.
----Likewise, there is not much doubt that wages are slumping, too. And we are talking here about the actual wages paid by millions of employers who remit payroll taxes to the US Treasury. The latter reports its results daily; and its collections are self-evidently at stall speed already.
The four-week moving average is now just barely 2% above last year,
meaning that after accounting for the 2% trend growth in wage inflation, there
is no growth in hours worked at all. Nor is there any doubt that the
trend is heading resolutely from the upper right to the lower left!
Needless to say, the number of employers who send in withholding taxes
for seasonally adjusted phantom employees is somewhere between zero and
none. Nor does the IRS even hear from companies who might have died or
could have been born.
Indeed, the BLS’ clunky modeling fantasies should have been
repudiated long ago by the chart below.
As of May 2008, the Great Recession was already six months old, but Wall
Street was still unloading its inventory. And all the while, the same talking
heads who have given the all-clear sign in the last 5 weeks were on
bubblevision gumming about Goldilocks, no recession in sight and stability on
the jobs front.
Here’s what happened next. Roughly 9 million jobs disappeared during the
following 20 month.
More
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.
At
the Comex silver depositories Tuesday final figures were: Registered 29.88 Moz, Eligible 125.69 Moz, Total 155.57 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, how the other half live. If you ever find
yourself in Palm Beach Florida, well worth a visit in itself, take a drive by “The
Donald’s” Mar-a-Lago estate.
“No man should receive
a dollar unless that dollar has been fairly earned.”
Theodore Roosevelt.
Obsolete.
A King in His Castle: How Donald Trump Lives, From His Longtime Butler
By JASON HOROWITZ MARCH 15, 2016
PALM BEACH, Fla. — Everything seemed to sparkle at the
Mar-a-Lago estate here on a recent afternoon. The sun glinted off the pool and
the black Secret Service S.U.V.s in the circular driveway. Palm trees rustled
in a warm breeze, croquet balls clicked and a security guard stood at the
entrance to Donald J. Trump’s private
living quarters.
“You can always tell when the king is here,” Mr.
Trump’s longtime butler here, Anthony Senecal, said of the master of the house
and Republican presidential candidate.
The king was returning that day to his Versailles, a
118-room snowbird’s paradise that will become a winter White House if he is
elected president. Mar-a-Lago is where Mr. Trump comes to escape, entertain and
luxuriate in a Mediterranean-style manse, built 90 years ago by the cereal
heiress Marjorie Merriweather Post.
Few people here can anticipate Mr. Trump’s demands and
desires better than Mr. Senecal, 74, who has worked at the property for nearly
60 years, and for Mr. Trump for nearly 30 of them.
He understands Mr. Trump’s sleeping patterns and how
he likes his steak (“It would rock on the plate, it was so well done”), and how
Mr. Trump insists — despite the hair salon on the premises — on doing his own
hair.
Mr. Senecal knows how to stroke his ego and lift his
spirits, like the time years ago he received an urgent warning from Mr. Trump’s
soon-to-land plane that the mogul was in a sour mood. Mr. Senecal quickly hired
a bugler to play “Hail to the Chief” as Mr. Trump stepped out of his limousine
to enter Mar-a-Lago.
Most days, though, he greeted Mr. Trump with little
fanfare, taking the suit he arrived in to be pressed in the full-service
laundry in the basement.
The next morning, before dawn and after about four
hours’ sleep, Mr. Trump would meet him at the arched entrance of his private
quarters to accept a bundle of newspapers including The New York Times, The
Daily News, The New York Post and the Palm Beach papers. Mr. Trump would emerge
hours later, in khakis, a white golf shirt and baseball cap. If the cap was
white, the staff noticed, the boss was in a good mood. If it was red, it was
best to stay away.
On Sundays, Mr. Trump would drive himself to his
nearby golf course, alternating each year between his black Bentley and his
white Bentley.
Mr. Senecal tried to retire in 2009, but Mr. Trump
decided he was irreplaceable, so while Mr. Senecal was relieved of his butler
duties, he has been kept around as a kind of unofficial historian at
Mar-a-Lago. “Tony, to retire is to expire,” Mr. Trump told him. “I’ll see you
next season.”
Mr. Senecal, with horn-rimmed glasses, a walrus
mustache and a white pocket kerchief in his black jacket, seems to reflect his
boss’s worldview: He worries about attacks by Islamic terrorists and is
critical of Mr. Trump’s ex-wives.
And like Mr. Trump, he is at ease among the
celebrities who visit the estate. But these days, instead of admiring Dixie
Carter as she sips crème de menthe by the fireplace and recites soliloquies
from the television show “Designing Women,” Mr. Senecal encounters Gov. Chris
Christie of New Jersey lounging on a couch under the living room’s 21-foot gold-leafed
ceiling, or chatting with Senator Jeff Sessions of Alabama as he exits the
luxurious Spanish Room.
The butler’s up-close observations of Mr. Trump over
the years have revealed not only the mogul’s quirks — Mr. Trump rarely appears
in bathing trunks, for example, and does not like to swim — but also his
habitual, self-soothing exaggerations.
More
“The
U.S. government has a technology, called a printing press (or, today, its
electronic equivalent), that allows it to produce as many U.S. dollars as it
wishes at essentially no cost…We conclude that under a paper-money system, a
determined government can always generate higher spending and hence positive
inflation.”
Dr.
Ben Bernanke. 2002
Brexit
Quote of the week.
The world is weary
of statesmen whom democracy has degraded into politicians.
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?
New fuel cell design powered by graphene-wrapped nanocrystals
Innovation could lead to faster fueling, improved performance for hydrogen-powered vehicles
Date:
March 14, 2016
Source:
DOE/Lawrence Berkeley National Laboratory
Summary:
A new materials recipe has been developed for a battery-like hydrogen fuel cell
that shields the nanocrystals from oxygen, moisture and contaminants while
pushing its performance forward in key areas.
Hydrogen is the lightest and most plentiful element on Earth and in our
universe. So it shouldn't be a big surprise that scientists are pursuing
hydrogen as a clean, carbon-free, virtually limitless energy source for cars
and for a range of other uses, from portable generators to telecommunications towers--with
water as the only byproduct of combustion.
While there remain scientific challenges to making hydrogen-based energy
sources more competitive with current automotive propulsion systems and other
energy technologies, researchers at the U.S. Department of Energy's Lawrence
Berkeley National Laboratory (Berkeley Lab) have developed a new materials
recipe for a battery-like hydrogen fuel cell--which surrounds
hydrogen-absorbing magnesium nanocrystals with atomically thin graphene
sheets--to push its performance forward in key areas.
The graphene shields the nanocrystals from oxygen and moisture and
contaminants, while tiny, natural holes allow the smaller hydrogen molecules to
pass through. This filtering process overcomes common problems degrading the performance
of metal hydrides for hydrogen storage.
These graphene-encapsulated magnesium crystals act as
"sponges" for hydrogen, offering a very compact and safe way to take
in and store hydrogen. The nanocrystals also permit faster fueling, and reduce
the overall "tank" size.
"Among metal hydride-based materials for hydrogen storage for
fuel-cell vehicle applications, our materials have good performance in terms of
capacity, reversibility, kinetics and stability," said Eun Seon Cho, a
postdoctoral researcher at Berkeley Lab and lead author of a study related to
the new fuel cell formula, published recently in Nature Communications.
In a hydrogen fuel cell-powered vehicle using these materials, known as
a "metal hydride" (hydrogen bound with a metal) fuel cell, hydrogen
gas pumped into a vehicle would be chemically absorbed by the magnesium
nanocrystaline powder and rendered safe at low pressures.
Jeff Urban, a Berkeley Lab staff scientist and co-author, said,
"This work suggests the possibility of practical hydrogen storage and use
in the future. I believe that these materials represent a generally applicable
approach to stabilizing reactive materials while still harnessing their unique
activity--concepts that could have wide-ranging applications for batteries,
catalysis, and energetic materials."
MoreThe monthly Coppock Indicators finished February
DJIA: 16517 -23 Down. NASDAQ: 4558 +45 Down. SP500: 1932 -17 Down.
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