Tuesday, 29 March 2016

The End of Quarter Approaches.

Baltic Dry Index. 406 Thur.        Brent Crude 39.98

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.
It is much easier to be critical than to be correct.
Dodgy Dave Cameron, with apologies to Benjamin Disraeli.

Asia turned wobbly as the end of quarter approaches. The Fed’s talking chair speaks again later today. Will she guide the markets on NIRP or when the Fedster’s will bring in their second rate hike? There was news out of China of yet another state steel maker defaulting. Oil prices started to fade once again. Barclays issued a commodities price warning. CNBC says that the USA has entered a “profits recession.”  It looks to be a very interesting end of quarter for professional money managers.

Asian stocks dip in anticipation of Yellen’s speech

Published: Mar 28, 2016 11:03 p.m. ET

Larger Asian markets set for third straight month of losses

Most stock markets in Asia fell Tuesday as investors weighed when the U.S. central bank might next raise interest rates.

Japan’s Nikkei Stock Average NIK, -0.39%   was down 0.2%, Australia’s S&P/ASX 200 XJO, -1.61%   was down 0.8% and Korea’s Kospi SEU, +0.26%   was up 0.2%. In China, the Shanghai Composite Index SHCOMP, -1.26%   was down 0.1%, while Hong Kong’s Hang Seng Index HSI, -0.26%   was little changed.

Investors were being cautious before U.S. Federal Reserve Chairwoman Janet Yellen was scheduled to speak Tuesday in New York on her views of the U.S. economy and monetary policy. Her comments could offer hints to when the Fed expects to raise rates, a move that Fed official James Bullard recently said could be as soon as April or June.
Many money managers are also expected to adjust portfolios before the first quarter ends Thursday. Large Asian stock markets, including Japan, China and Hong Kong, are down for the three months ending March. Smaller markets in Thailand, Indonesia and the Philippines, look set to book gains for the quarter.

Steelmaker Becomes Latest Chinese Company to Miss Bond Payment

March 28, 2016 — 12:36 PM BST
A state-owned Chinese steelmaker failed to make a 852 million yuan ($131 million) bond payment and expressed uncertainty about meeting a larger bill next week as the slowing economy weighs on debt-laden producers.

Dongbei Special Steel Group Co., based in the northeastern city of Dalian, said it failed to repay the sum of interest and principal due Monday, according to a statement posted on the Chinamoney website. The company said in a separate statement that it also might not be able to repay 1 billion yuan due April 3 on a 90-day bill because of tight liquidity. The company sold 800 million yuan in one-year bonds last year with a coupon of 6.5 percent, according to data compiled by Bloomberg.

Chinese firms are struggling with surging debt burdens as Premier Li Keqiang seeks to weed out zombie corporations amid the country’s worst economic slowdown in a quarter century. At least a dozen companies have defaulted on bonds over the past two years even as the central bank loosened monetary policy. Nanjing Yurun Foods Co., a sausage maker, and Zibo Hongda Mining Co., an iron ore miner, both said they defaulted on notes this month.

Dongbei Special Steel’s missed payment comes just four days after the company disclosed that its former chairman, Yang Hua, was found dead by hanging at his home. The company said the death was under investigation by the relevant authority.

Other Chinese steelmakers are also facing rising debt pressures. The northern city of Tianjin plans to set up a committee of creditors to help Bohai Steel Group Co. “get out of trouble,” Caixin reported March 18.
Minister of Human Resources Yin Weimin said Feb. 29 that about 1.8 million steel-and-coal workers would be laid off as the country cuts industrial overcapacity and reforms bloated state-owned enterprises.

Barclays Warns Commodities May Slump on `Rush for the Exits'

March 29, 2016 — 1:09 AM BST Updated on March 29, 2016 — 4:01 AM BST
Commodities including oil and copper are at risk of steep declines as recent advances aren’t fully grounded in improved fundamentals, according to Barclays Plc, which warned that prices may tumble as investors rush for the exits.

Copper may slump to the low $4,000s a metric ton, from $4,945 in London last week, while oil could fall back to the low $30s a barrel, analyst Kevin Norrish said in a note. The risk for raw materials is that investors seek to liquidate bets on gains quickly and in unison, with potentially highly negative consequences, Norrish wrote in the note entitled “Buffalo Jump,” a term that describes a cliff where Native Americans herded bison to their death.

“Investors have been attracted to commodities as one of the best performing assets so far in 2016,” he said in the March 28 report. “However, in the absence of any concerted fundamental improvements, those returns are unlikely to be repeated in the second quarter, making commodities vulnerable to a wave of investor liquidation.”

Commodities are headed for a quarterly advance amid speculation that prices may now be bottoming after they slumped 11 percent in the final three months of 2015 and 14 percent in the third quarter. Oil and copper have recovered from multiyear lows seen in the January and February, and Barclays estimated net flows into commodity products totaled more than $20 billion in the two-month period in the strongest start to a year since 2011.

Profits Recession Is Here—-Stock Market Rally Is Over

by CNBC • 
The S&P 500 may have surged 10 percent since its Feb. 11 low, but a Bank of America-Merrill Lynch strategist is warning the bounce is on very shaky ground.

Publicly traded companies have seen negative earnings growth two quarters in a row and there are no fundamental underpinnings for the rally, Savita Subramanian, BofAML’s head of U.S. equity and quantitative strategy, said on CNBC’s “Fast Money” this week.

“We are in a profits recession. There (are) no two ways around it,” said Subramanian, whose S&P 500 price target of 2,000 is among the lowest on Wall Street. She is also concerned about how Federal Reserve monetary policy could affect stocks.

“You have the Fed embarking on a long, slow tightening cycle. Tightening into a profits recession doesn’t sound like anything to throw a big party about,” she said.

The result? Widening credit spreads and the capital markets basically shutting down, Subramanian said.
“We had zero IPOs in January… Normally you see about $15 billion come to market in the first month of the year. Nobody is raising capital,” she said. Covering of short positions, or bearish bets that certain stocks will fall, and other positionings have been behind the recent rally, she added.

“We need to see some kind of material sales growth, and that’s been the missing link. Look at all the earnings reports we’ve seen. It’s earnings beat, but sales miss,” Subramanian added. “They are manufacturing earnings through buybacks or cost-cutting. But it’s not real growth that we’re seeing at a fundamental level.”

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.
At the Comex silver depositories Monday final figures were: Registered 32.32 Moz, Eligible 123.30 Moz, Total 155.62 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Syria, the all against all war, with the CIA forces now fighting the Pentagon forces. Adding to the confusion and misery, so called NATO member Turkey is busy attacking the Pentagon forces which are mostly Kurdish, while arming ISIS which everyone is officially fighting, although only Russia and Syria are actually fighting ISIS. Little wonder that Putin and Assad are winning and Syrians are headed en-mass to Germany thanks to an invite from Mad Mrs Merkel and a push policy by President Erdogan.

Tangle deepens in Syrian war as U.S.-backed factions clash with each other

By Nabih Bulos, W.J. Hennigan and Brian Bennett Tribune News Service 17 hrs ago
Syrian militias armed by different parts of the U.S. war machine have begun to fight each other on the plains between the besieged city of Aleppo and the Turkish border, highlighting how little control U.S. intelligence officers and military planners have over the groups they have financed and trained in the 5-year-old civil war.
The fighting has intensified over the last two months as CIA-armed units and Pentagon-armed ones have repeatedly shot at each other while maneuvering through contested territory on the northern outskirts of Aleppo, U.S. officials and rebel leaders have confirmed.
In mid-February, a CIA-armed militia called Fursan al Haq, or Knights of Righteousness, was run out of the town of Marea, about 20 miles north of Aleppo, by Pentagon-backed Syrian Democratic Forces moving in from Kurdish-controlled areas to the east.
“Any faction that attacks us, regardless from where it gets its support, we will fight it,” Maj. Fares Bayoush, a leader of Fursan al Haq, said in an interview.
Rebel fighters described similar clashes in the town of Azaz, a key transit point for fighters and supplies between Aleppo and the Turkish border, and on March 3 in the Aleppo neighborhood of Sheikh Maqsud.
The attacks by one U.S.-backed group against another come amid continued heavy fighting in Syria and illustrate the difficulty facing U.S. efforts to coordinate among dozens of armed groups that are trying to overthrow the government of President Bashar Assad, fight the Islamic State militant group and battle one another all at the same time.
“It is an enormous challenge,” said Rep. Adam Schiff, D-Calif., the top Democrat on the House Intelligence Committee, who described the clashes between U.S.-supported groups as “a fairly new phenomenon.”
“It is part of the three-dimensional chess that is the Syrian battlefield,” he said.
The area in northern Syria around Aleppo, the country’s second-largest city, features not only a war between the Assad government and its opponents, but also periodic battles against Islamic State militants, who control much of eastern Syria and also some territory to the northwest of the city, and long-standing tensions among the ethnic groups that inhabit the area, Arabs, Kurds and Turkmen.
“This is a complicated, multisided war where our options are severely limited,” said a U.S. official, who wasn’t authorized to speak publicly on the matter. “We know we need a partner on the ground. We can’t defeat ISIL without that part of the equation, so we keep trying to forge those relationships.” ISIL is an acronym for Islamic State.
President Barack Obama last week authorized a new Pentagon plan to train and arm Syrian rebel fighters, relaunching a program that was suspended in the fall after a string of embarrassing setbacks that included recruits being ambushed and handing over much of their U.S.-issued ammunition and trucks to an al-Qaida affiliate.
Amid the setbacks, the Pentagon late last year deployed about 50 special operations forces to Kurdish-held areas in northeastern Syria to better coordinate with local militias and help ensure U.S.-backed rebel groups aren’t fighting one another. But such skirmishes have become routine.
Last year, the Pentagon helped create a new military coalition, the Syrian Democratic Forces. The goal was to arm the group and prepare it to take territory away from the Islamic State in eastern Syria and to provide information for U.S. airstrikes.
The group is dominated by Kurdish outfits known as People’s Protection Units, or YPG. A few Arab units have joined the force in order to prevent it from looking like an invading Kurdish army, and it has received air drops of weapons and supplies and assistance from U.S. Special Forces.
Gen. Joseph Votel, now commander of U.S. Special Operations Command and the incoming head of Central Command, said this month that about 80 percent of the fighters in the Syrian Democratic Forces were Kurdish. The U.S. backing for a heavily Kurdish armed force has been a point of tension with the Turkish government, which has a long history of crushing Kurdish rebellions and doesn’t want to see Kurdish units control more of its southern border.
The CIA, meanwhile, has its own operations center inside Turkey from which it has been directing aid to rebel groups in Syria, providing them with TOW antitank missiles from Saudi Arabian weapons stockpiles.
----Over the course of the Syrian civil war, the town of Marea has been on the front line of Islamic State’s attempts to advance across Aleppo province toward the rest of northern Syria.
On Feb. 18, the Syrian Democratic Forces attacked the town. A fighter with the Suqour Al-Jabal brigade, a group with links to the CIA, said intelligence officers of the U.S.-led coalition fighting Islamic State know their group has clashed with the Pentagon-trained militias.
“The MOM knows we fight them,” he said, referring to the joint operations center in southern Turkey, using an abbreviation for its name in Turkish, Musterek Operasyon Merkezi. “We’ll fight all who aim to divide Syria or harm its people.” The fighter spoke on condition of anonymity.
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?

Today an update on the continuing rise of solar power. As the price of panels and inverters falls and the efficiency of panels and inverters rise, this is a tred likely to continue for several decades.

Oman to encourage household generation of solar power

Mon Mar 28, 2016 10:32am BST
Oman will encourage households to generate electricity with solar panels and feed it into the national grid, Qais al-Zakwani, executive director of the Authority for Electricity Regulation, said on Monday.
The policy could put Oman in the forefront of Middle East nations promoting widespread use of solar powerhttp://images.intellitxt.com/ast/adTypes/icon1.png. Its finances severely damaged by low oil prices, the Omani government is seeking ways to save money, including a cut in electricity subsidies for commercial and industrial users.
Zakwani told Reuters the authority aimed to have a mechanism in place by mid-year for households to generate power using solar roofing panels, and provide the power to the grid in exchange for cuts in their electricity tariffs.
Zakwani said the new programme would initially focus on residential units but eventually be extended to commercial entities; "we seek distributed power generation". He said it was too early to estimate the financial size of the programme.

OPGC starts solar power projects

Updated: March 28, 2016 05:44 IST
The Odisha Power Generation Corporation Limited, a State-run power generating company, has installed a rooftop solar project on the existing plant switchyard building at its Banharpali-based Ib Thermal Power Station (ITPS) in Jharsuguda district as part of a demonstration project.
According to the company, the capacity of this solar project is three kW and it will supply power to the switchyard building internal lighting system. Another solar project -- solar water heater project -- is being executed at the rooftop of ITPS township guesthouse, said the company which is exploring the options of installing additional solar equipment in days to come.
The OPGC is currently operating a coal power plant of capacity 2X210 mW (Unit1 and 2). As part of its capacity addition programme, the OPGC is expanding its power project of 2x660 mW (Unit 3 and 4) with a capital outlay of Rs.11,547 crore based on supercritical technology, adjacent to the existing power station at the same location. According to a statement released by the State PSU, the project is under advance stage of construction with Bharat Heavy Electricals Limited as main plant contractor and BGR Energy Systems Limited as balance of plant contractor.

FactCheck Q&A: is Australia the world leader in household solar power?

March 27, 2016 11.58pm BST
It might also surprise you to know that nearly 15% of Australian households have solar panels on their roofs. That’s the highest number of solar panels on people’s roofs per capita anywhere in the world. – Energy Minister Josh Frydenberg, speaking on Q&A on March 22, 2106.

Solar photovoltaics (PV) technology produces electricity directly from solar energy. When you see a solar panel on a household roof, it’s most likely solar PV technology at work within those shiny blue or black, silver-framed plates. (If not, they’re likely to be solar hot water system panels.)

Solar PV has made a valuable contribution towards reducing Australia’s very high per-capita greenhouse emissions from electricity generation.

Energy Minister Josh Frydenberg’s told Q&A viewers that Australia has more household solar panels, per head of population, than anywhere in the world.

Let’s check the claim against the available evidence.

---- Note that the kilowatt (kW) capacity here refers to the size of the PV system, and represents the maximum power (Watts) the system generates in the middle of a sunny day.
A typical PV panel is rated at around 250 Watts (0.25kW). A typical residential PV system in Australia is sized somewhere between 1.5-5kW, or 6 to 20 panels. As a basis for comparison, a typical air-conditioner typically consumes around 1-2kW when running.
For our calculation, we assumed that all systems less than 10kW are installed on household premises (although, in fact, a few are installed on small businesses and community buildings such as surf clubs and schools).
Here’s what the data show:
---- So Frydenberg has actually likely slightly underestimated the proportion of Australian households with a PV system. It’s not 15% – it’s more like 16.5%, according to the latest data.

PV systems are not evenly distributed across Australia’s residential sector, as the Australian PV Institute’s live PV map shows:

The monthly Coppock Indicators finished February

DJIA: 16517 -23 Down. NASDAQ:  4558 +45 Down. SP500: 1932 -17 Down. 

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