Friday, 15 April 2016

A Long Weekend.

Baltic Dry Index. 597 +30       Brent Crude 43.88

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

Brexit odds checker.

Brexit Quote of the Day.
“If Cameron will stop telling lies about the EU, we will stop telling the truth about him.”

Nigel Farage, with apologies to Adlai Stevenson

Today not too much to cover. All the world’s global gasbags are in Washington District of Crooks, for the G-20 meeting and the Spring meetings of the IMF and World Bank. Topping their discussions, yesterday’s new round in the currency wars initiated by Singapore and China’s immediate reaction to it.  Also on their agenda, the havoc created in the emerging markets from the commodities and shipping depression generated by China’s malinvestment slowdown, and thanks to the Panama Papers, massive worldwide corporate tax evasion by the law unto themselves, too big to tame multi-national behemoths. Since little ever comes out of such meetings, and even less of anything actually useful, little is expected from this gathering of global gasbags.
In Doha on Sunday, Saudi Arabia and lesser OPEC meet with Russia and some other non-OPEC oil producing friends, to see if they can hammer out a Goldilocks oil production agreement, that stabilises the crude oil price in the 50s, just high enough to ease OPEC members pain, but not high enough to set off another oil fracking “gold-rush” in the Dakotas, Oklahoma and Texas. Whatever happens, Russia, Iran and Brazil, are likely to be the real winners. They get hard currency for their oil sales, while paying their production cost in depreciated local currency.

Fifty biggest US companies stashing $1.3trn offshore

Coca-Cola, Walt Disney, Alphabet (Google) and Goldman Sachs all implicated in Oxfam report
The 50 biggest US companies have more money stashed offshore than the entire GDP of Spain, Mexico or Australia, collectively keeping about $1.3trn (£0.91trn) in territories where the money does not count towards US tax, according to a new report by Oxfam.
The revelations come after the European Commission announced plans to make big companies more transparent about where they pay tax.
The charity said the Commission's proposals are “almost useless” for identifying where tax avoidance may be happening. It urged the UK Government to push for stronger rules to ensure that companies pay tax in all countries where they do business.
Robbie Silverman, Senior Tax Advisor at Oxfam, said that tax avoidance in the US will have a knock-on effect in countries around the world.
“The same tricks and tools used by multinational companies to dodge tax in the US are being used to cheat countries across the world out of their fair share of tax revenues, with devastating consequences,” he said. 
“Poor countries are particularly hard hit, losing an estimated $100bn a year to corporate tax dodgers. This is enough to provide safe water and sanitation to more than 2.2 billion people,” he added.
In its investigation into the US tax system, Oxfam revealed some of the offshore accounting practices of the biggest companies in the US. Fifty companies including Coca-Cola, Walt Disney, Alphabet (Google) and Goldman Sachs keep a total of about $1.3trn in subsidiary companies registered all over the world, Oxfam says.
The Independent has contacted the companies named above for comment. Goldman Sachs declined to comment, the others did not respond.

The 50 companies are believed to have earned $4trn in profits globally from 2008-2014, but paid only 26.5 per cent of this in tax in the US, below the country’s statutory tax rate of 35 per cent. They rely on an opaque and secretive network of more than 1,600 disclosed subsidiaries in tax havens to stash about $1.3trn offshore, Oxfam said. It added that other offshore subsidiaries may be in use but under the radar of the Securities and Exchange Commission, because of weak reporting requirements.
These same 50 companies collectively received $27 in federal aid-like loans, loan guarantees and bailouts for every $1 they paid in federal taxes, amounting to a total of $11.2 trillion, Oxfam said.
Charities including Oxfam and Christian Aid have dismissed European Commission proposals to crack down on tax dodging as “close to pointless”. Christian Aid said new rules would allow “dodgy business as usual”.

OECD Says Panama Committed to Common Tax Reporting Standard

April 14, 2016 — 9:21 PM BST
OECD Secretary General Angel Gurria said that Panama has agreed to join common tax reporting standards in the wake of the publication of millions of documents relating to people who had placed their money offshore.

Gurria announced the pledge at a press conference in Washington Thursday alongside the finance ministers of France, Spain, Germany, Italy and the U.K.

Oil Producers Head for Doha Counting $315 Billion Cost of Slump

April 15, 2016 — 12:13 AM BST
The world’s top oil exporters are burning through their petrodollar assets at an accelerating pace, increasing the pressure to reach a deal to freeze production to bolster prices.

The 18 nations set to gather in Doha on Sunday to discuss a production freeze have spent $315 billion of their foreign-exchange reserves -- about a fifth of their total -- since the oil slump started in November 2014, according to data compiled by Bloomberg. In the last three months of 2015, reserves fell nearly $54 billion, the largest quarterly drop since the crisis started.

The petrodollar burn has consequences beyond the oil nations, affecting international fund managers like Aberdeen Asset Management Plc and global currencies markets. Oil nations have traditionally held their reserves in U.S. Treasuries and other liquid securities. Nonetheless, the impact in credit markets has been muted as central banks continue to buy debt.

"We expect 2016 to be yet another painful year for most of the oil states," said Abhishek Deshpande, oil analyst at Natixis SA in London.

The gathering in Doha will comprise both OPEC and non-OPEC states, though any deal to boost prices will probably be largely cosmetic as countries are already pumping nearly at record levels.
In a letter inviting countries to the Doha meeting, Qatar Energy Minister Mohammed Al Sada said oil countries need to stabilize the market in "the interest of a healthier world economy as the present low price is seen to be benefiting no one."

Saudi Arabia accounts for nearly half of the decline in foreign-exchange reserves among oil producers, with $138 billion -- or 23 percent of its total -- followed by Russia, Algeria, Libya and Nigeria. In the final three months of last year, Saudi Arabia burned through $38.1 billion, the biggest quarterly reduction in data going back to 1962.

The oil slump started in November 2014 when the Organization of Petroleum Exporting Countries, led by the Saudis, decided to fight for market share -- and bury U.S. producers -- rather than cut production to support prices as it had done in the past. The policy sent Brent crude, the global oil benchmark, down from an annual average of $111 a barrel in 2013 to an average of just $35 so far this year. The plunge forced producers to tap their rainy day funds
Elsewhere, in Europe, Germany’s leading car maker is paying the price for swindling all those buyers of killer diesel engines. In Asia, China “booms” on yet another debt bubble, if we believe the official figures. I think we all know how that ends, if not when.

Volkswagen Europe Market Share Hits Five-Year Low Amid Scandal

April 15, 2016 — 7:00 AM BST
Volkswagen AG’s European first-quarter market share reached a five-year low as auto buyers snubbed the German carmaker’s efforts to resolve its emissions-cheating scandal and turned to models from BMW AG, Fiat Chrysler Automobiles NV and Daimler AG.

Volkswagen’s brands, including mass-market Skoda and up-market Audi, accounted for 23.4 percent of new registrations in the three months ended March versus 24.4 percent a year earlier, the European Automobile Manufacturers’ Association said Friday in a statement. That was Volkswagen’s worst showing for the period since 2011. Industrywide demand in the region rose 5.7 percent to 1.74 million cars in March, the 31st consecutive month of growth, and jumped 8.1 percent in the quarter to 3.93 million.

The German company has struggled to regain customers’ trust after admitting in mid-September to rigging exhaust systems on 11 million diesel-powered cars worldwide to falsely pass official emissions tests. Its biggest-selling brands have also lacked new sport utility vehicles in their lineups, enabling Fiat Chrysler’s Jeep unit, Daimler’s Mercedes-Benz and BMW to gain buyers as the models become more popular.

Volkswagen group European sales rose 2.3 percent in March, held back by a 1.6 percent drop at the VW nameplate. In its German home market, the division’s sales dropped 6.3 percent last month while industrywide demand held steady. Group first-quarter registrations in Europe increased 3.5 percent, despite the brand’s 0.5 percent decline.

The strongest sales gains in Europe last month included 15 percent at BMW, which is luring drivers with the X3 and coupe-like X6 SUVs, and 13 percent at Fiat Chrysler, bolstered by Jeep’s Grand Cherokee and compact Renegade and the Fiat marque’s 500X SUV. Daimler’s March registrations jumped 11 percent as Mercedes, which overtook BMW’s namesake brand to lead the global luxury-car market in the quarter, won buyers with a new version of its E-Class sedan as well as the GLE and coupe-style GLC SUVs.

The SUV segment may expand to 25 percent of Europe’s market by the end of this year from 23 percent now, Roelant de Waard, Ford Motor Co.’s head of sales in the region, told journalists on a conference call Thursday. Growing demand has helped keep pricing stronger for those models, he said. That contrasts with discounts of about 25 percent on subcompacts in France reported by data-analysis firm JATO.

Chinese economy shows signs of debt-fueled recovery

Fri Apr 15, 2016 1:18am EDT
China posted its slowest economic growth since 2009 but a surge of new debt appears to be fueling a recovery in factory activity, investment and household spending in the world's second largest economy.

That's good news in the near-term, economists say, but many worry it marks a return to the old playbook used during the financial crisis, when Beijing hand-cranked its economy out of a slowdown through massive stimulus.

Official data on Friday showed China's gross domestic product grew at an annual rate of 6.7 percent in the first quarter of the year, easing slightly from 6.8 percent in the fourth quarter as expected. However, other indicators released showed new loans, retail sales, industrial output and fixed asset investment were all better than forecast.

While analysts say the data is evidence of a bottoming out in the economy's slowdown, some warn that the first quarter of 2015 got off to a similarly glowing start before a stock market crash later that year.

"What this shows is a stabilisation of the old economy," said Raymond Yeung of ANZ, pointing to recovery in industrial production and fixed asset investment.

"I would still be a bit cautious about headline growth... last year's 6.9 percent figure was underpinned by a massive contribution from financial services, and the strong loan and credit growth recently and the recent resumption of IPO activity suggests this could still be a big contribution."

The National Bureau of Statistics said in a press conference in Beijing on Friday that while main economic indicators showed positive changes, "downward pressure cannot be underestimated."

Global and domestic financial markets took the data in their stride. The NBS did not distribute quarterly GDP figures as it has in the past, saying it needed more time to calculate the figure.

Beijing hopes a recovery - even a credit-fueled one - can be sustained to avoid the need for more aggressive stimulus that could reinflate asset bubbles and make it more difficult to retrain Chinese firms to move up the value chain.

Chinese banks extended 1.37 trillion yuan ($211.23 billion) in net new yuan loans in March, nearly double the previous month's lending of 726.6 billion yuan, suggesting renewed appetite for investment among wary Chinese corporates.

China's retail sales growth quickened to 10.5 percent, while fixed-asset investment growth quickened to 10.7 percent year-on-year in the first quarter, beating market expectations for 10.3 percent, and industrial output growth leapt up to 6.8 percent, surprising analysts who expected it to rise 5.9 percent on an annual basis after a rise of 5.4 percent in the January and February period.

China’s giant bonfire of debt needs one spark to become an inferno

Published: Apr 14, 2016 4:44 p.m. ET
China’s debt bonfire has been building for decades, but recent news and data points to it growing faster than ever with a greater risk of becoming an economy-scorching inferno.

There are three key components to this analogy: the wood, the accelerant and the matches.

First the wood, which is an ever-growing stockpile of debt that cannot be serviced from profits.

As shown below, Macquarie Research found that 23% of bonds issued were by companies that don’t 
generate enough operating profit to cover their interest. This aligns with a Bloomberg report that the median Chinese listed company generates enough operating profit to cover their interest two times, down from a ratio of six times in 2010.

"Under capitalism man exploits man; under socialism the reverse is true."
Polish proverb under communism.

At the Comex silver depositories Thursday final figures were: Registered 32.44 Moz, Eligible 121.67 Moz, Total 154.11 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
With China cracking down on corruption, and conspicuous consumption deeply frowned on, Vancouver British Columbia is the place to go. Probably the place to go too, for some President Xi’s anti-corruption spooks. “Hello dad. The wires have stopped coming.”

‘In Vancouver, there are lots of kids of corrupt Chinese officials. Here, they can flaunt their money’

Dan Levin, The New York Times Wednesday, Apr. 13, 2016
VANCOUVER, British Columbia — Andy Guo, an 18-year-old Chinese immigrant, loves driving his red Lamborghini Huracán. He does not love having to share the car with his twin brother, Anky.
“There’s a lot of conflict,” Andy Guo said, as a crowd of admirers gazed at the vehicle and its vanity licence plate, “CTGRY 5,” short for the most catastrophic type of hurricane.
The $360,000 car was a gift last year from their father, who travels back and forth between Vancouver and China’s northern Shanxi province and made his fortune in coal, said Andy Guo, an economics major at the University of British Columbia.
The car is more fashion than function. “I have a backpack, textbooks and laundry, but I can’t fit everything inside,” he lamented. And that is not the worst of it. “A cop once pulled me over just to look at the car,” he said.
China’s rapid economic rise has turned peasants into billionaires. Many wealthy Chinese are increasingly eager to stow their families — and their riches — in the West, where rule of law, clean air and good schools offer peace of mind, especially for those looking to escape scrutiny from the Communist Party and an anti-corruption campaign that has sent hundreds of the rich and powerful to jail.
With its relatively weak currency and welcoming immigration policies, Canada has become a top destination for China’s 1 percenters. According to government figures, from 2005 to 2012, at least 37,000 Chinese millionaires took advantage of a now-defunct immigrant investor program to become permanent residents of British Columbia. The metropolitan area of 2.3 million is home to increasing numbers of ethnic-Chinese residents, who made up more than 18 per cent of the population in 2011, up from less than 7 per cent in 1981, according to government figures.
Many residents say the flood of Chinese capital has caused an affordable housing crisis. Vancouver is the most expensive city in Canada to buy a home, according to a 2016 survey by the consulting firm Demographia. The average price of a detached house in greater Vancouver more than doubled from 2005 to 2015, to about $1.6 million, according to the Real Estate Board of Greater Vancouver.

Residents angry about the rise of rich foreign real estate buyers and absentee owners, particularly from China, have begun protests on social media, including a #DontHave1Million Twitter campaign. The provincial government agreed this year to begin tracking foreign ownership of real estate in response to demands from local politicians.

The anger has had little effect on the gilded lives of Vancouver’s wealthy Chinese. Indeed, to the newcomers for whom money is no object, the next purchase after a house is usually a car, and then a few more.

A large number of luxury car dealerships here employ Chinese staff, a testament to the spending power of the city’s newest residents. In 2015, there were 2,500 cars worth more than $150,000 registered in metropolitan Vancouver, up from 1,300 in 2009, according to the Insurance Corporation of British Columbia.
Many of Vancouver’s young supercar owners are known as fuerdai, a Mandarin expression, akin to trust-fund kids, that means “rich second generation.” In China, where the superrich are widely criticized as being corrupt and materialistic, the term provokes a mix of scorn and envy.
The fuerdai have brought their passion for extravagance to Vancouver. White Lamborghinis are popular among young Chinese women; the men often turn in their leased supercars after a few months for a newer, cooler status symbol.
Hundreds of young Chinese immigrants, along with a handful of Canadian-born Chinese, have started supercar clubs whose members come together to drive, modify and photograph their flashy vehicles, providing alluring eye candy for their followers on social media.
The Vancouver Dynamic Auto Club has 440 members, 90 per cent of whom are from China, said the group’s 27-year-old founder, David Dai. To join, a member must have a car that costs more than $100,000.
“They don’t work,” Dai said of Vancouver’s fuerdai. “They just spend their parents’ money.”
Occasionally, the need for speed hits a roadblock. In 2011, the police impounded a squadron of 13 Lamborghinis, Maseratis and other luxury cars, worth $2 million, for racing on a metropolitan Vancouver highway at 200 km/h. The drivers were members of a Chinese supercar club, and none were older than 21, according to news reports at the time.
On a recent evening, an overwhelmingly Chinese crowd of young adults had gathered at an invitation-only Rolls-Royce event to see a new black-and-red Dawn convertible, base price $402,000. It is the only such car in North America.
Among the curious was Jin Qiao, 20, a baby-faced art student who moved to Vancouver from Beijing six years ago with his mother. During the week, Jin drives one of two Mercedes-Benz SUVs, which he said were better suited for the rigours of daily life.
But his most prized possession is a $600,000 Lamborghini Aventador Roadster Galaxy, its exterior custom wrapped to resemble outer space. Jin, a lanky design major who favours Fendi clothing and gold sneakers, extolled the virtues of exotic cars and was quick to dismiss those who criticized supercar aficionados as ostentatious.
“There are so many rich people in Vancouver, so what’s the point of showing off?” he said.
Asked what his parents did for a living, Jin said his father was a successful businessman back in China but declined to provide details.
“I can’t say,” he stammered with evident discomfort.

"You can't cheat an honest man." W.C. Fields, comedian.

“Except with Fiat Money.” Janet Yellen, comedienne.

Brexit Quote of the week.

Cameron: He knows nothing and thinks he knows everything. That points clearly to a political career.

With apologies to George Bernard Shaw

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?

Using nanotubes to create single photons for quantum communication

Date: April 12, 2016

Source: Department of Energy, Office of Science

Summary: Researchers demonstrated a new material, made from tiny carbon tubes, that emits the desired single photons (of interest for data encryption) at room temperature.
Critical information, ranging from credit card numbers to national security data, is sent in streams of light, or laser pulses. However, the data transmitted in this manner can be stolen by splitting out a few photons (packets of light) from the laser pulse. Such eavesdropping could be prevented by encoding the data into single photons. But that requires generating single photons. Researchers demonstrated a new material, made from tiny carbon tubes, that emits the desired photons at room temperature.
Digital eavesdropping could be prevented by encoding bits of information in the properties, or quantum mechanical states, of single photons. Single photons emitted by carbon nanotubes altered, or doped with oxygen, are especially attractive for realizing this quantum information technology.
Single photon generation requires an isolated, quantum mechanical, two-level system that can emit only one photon in one excitation-emission cycle. While artificial nanoscale materials (such as quantum dots and vacancy centers in diamonds) have been explored for single photon generation, none have emerged as the ideal candidate that meets all of the technological requirements. These requirements include the ability to generate single photons in the 1.3 to 1.5 µm fiber optic telecommunication wavelength range at room temperature. Earlier studies revealed that carbon nanotubes were not suited for use in quantum communications because the tubes required extremely low temperatures and had strong photoluminescence fluctuations.
In contrast to these earlier findings, researchers led by Han Htoon and Stephen Doorn of the Center for Integrated Nanotechnologies showed that oxygen doping of carbon nanotubes can lead to fluctuation-free photoluminescence emission in the telecommunication wavelength range. Experiments measuring the time-distribution of two successive photon emission events also unambiguously demonstrated single photon emission at room temperature.
Furthermore, because oxygen doping is achieved through a simple deposition of a silicon dioxide layer, these doped carbon nanotubes are fully compatible with silicon microfabrication technology and can be fabricated into electrically driven single photon sources.
In addition, the silicon dioxide layer encapsulating the nanotubes allows for their easy integration into electronic and photonic integrated circuits. Beyond the implementation of this new method into quantum communication technologies, nanotube-based single photon sources could enable other transformative quantum technologies, including ultra-sensitive absorption measurements, sub-diffraction imaging, and linear quantum computing.
This work was funded, in part, through the Laboratory Directed Research and Development (LDRD) program and was performed at the DOE Basic Energy Sciences Center for Integrated Nanotechnologies (CINT) under user project U2012B0040.

Another weekend and big pow wows underway in the District of Crooks, in America, and in the sandy flatlands of Qatar. The first are trying to set out the rules for the ever expanding 21st century fiat currency wars, caused by the increasingly dysfunctional Great Nixonian Error of fiat money. The latter are trying to rig the price of crude oil higher, but not high enough to bail out America’s oil fracking industry. USAs best Arab ally, the Saudis, are now about to get into bed with oil producers from Russia to Venezuela, to wipe-out Uncle Scam’s  fracking industry. It’s a funny old world 45 years deep into the Great Nixonian error of fiat money, communist money. 

For now, fiat money, pretend money, still functions almost like real money, but only with ever larger distortions and malinvestments, and ever deeper trips into the hopium of voodoo economics. Pixie dust no longer acts like pixie dust, in the second decade of the 21st century. America, Europe and China, are all teetering on the edge of a vast abyss. Will the big pow wows save them or inadvertently push them in? Have a Great Weekend everyone.

"Get a good night's sleep and don't bug anybody without asking me."

Richard M. Nixon, 37th President, to his re-election campaign manager.

The monthly Coppock Indicators finished March

DJIA: 17685.09 -18 Down. NASDAQ:  4869.85 +33 Down. SP500: 2059.74 -22 Down. 


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