Tuesday, 26 April 2016

Global Capital Flight.

Baltic Dry Index. 690 +02      Brent Crude 44.70

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

Brexit odds checker.

Brexit Quote of the Day.
"If the EU cannot resolve a small problem the size of Greece, what is the point of Europe?"

Romano Prodi, former chief of the European Commission, former Italy Prime Minister.

We open today with rising signs of global capital flight. In London, the capital flight is mostly Arab and European. In Vancouver, British Columbia, Chinese capital flight. But the cause and end result is largely the same. Fear of the future if trouble arises that disturbs the central banksters bubble economy, and the capital flight overwhelmingly goes into overseas property, often at seemingly surreal prices.

Below, the latest real estate news from London.  Capital flight into real estate prices out the locals in the capital, driving them further out into the commuter belt. The overall impact is higher property prices and rents. Another unintended consequence of the Great Nixonian Error of fiat money, although to misquote Keynes, “and it does it in a manner which not one man in a million is able to diagnose."

"Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become 'profiteers', who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.”

John Maynard Keynes.

London's Chelsea Barracks Homes Said to Sell at 200% Premium

April 25, 2016 — 10:05 AM BST Updated on April 25, 2016 — 12:04 PM BST
Qatari Diar Real Estate Investment Co. has sold almost 30 homes at its $4.3 billion Chelsea Barracks project in London before the properties are offered to the wider market later this year, according to a person with knowledge of the matter.

Buyers agreed to pay the equivalent of about 4,500 pounds ($6,500) a square foot, said the person, who asked not to be identified because the information is private. That compares with an average price of about 1,500 pounds a square foot for homes sold in central London’s best districts in March, according to data compiled by broker Huntly Hooper Ltd. Qatari Diar and officials at Knight Frank LLP and Savills Plc, who are brokering the sales, declined to comment.

A joint venture paid 959 million pounds for the 5.3 hectare (13-acre) site in January 2008 and Qatari Diar, part of the nation’s sovereign wealth fund, later took full control of the project. A unit of the fund won local-government approval in 2011 to develop almost 450 homes, stores, a health center and leisure facilities on the land. An earlier plan was dropped after it was opposed by Prince Charles.

The project, due to be finished in 2024, will be valued at 3 billion pounds, according to the website of RLF, a health and safety consultant for the project. A model home may open as soon as next month, the person said.

Home prices in Chelsea fell 2.5 percent in the year through March, according to a report compiled by Knight Frank. Values of homes across the capital’s best districts rose 0.8 percent in the same period, the data show.

In the EUSSR, disturbing sign that Super Mario’s bubble is about to get popped. As in Japan, reality isn’t playing out like the central banksters script anymore. Despite what Yankee Doodle Dandy and Dodgy Dave say, Brexit looks to be better for Britain with each passing week. Stay long fully paid up physical gold and silver held outside of the rigged financial system.

Italy's Yield Reaches Two-Month High as ECB's Impact Seen Waning

April 25, 2016 — 11:13 AM BST Updated on April 25, 2016 — 3:03 PM BST
The European Central Bank’s ability to prop up the region’s lower-rated debt may be diminishing: Italy’s 10-year bond yield climbed to the highest in two months on Monday, just days after officials said their stimulus policies are working.
Italian government bonds fell, with the 10-year yield premium over benchmark German securities reaching the largest in two weeks, even as the ECB buys 80 billion euros ($90 billion) a month of the euro region’s debt. For much of last year, the quantitative-easing program helped Italian bonds outperform their peers from the continent’s richer nations as investors sought out higher yields.
Last week, ECB policy makers kept interest rates unchanged and President Mario Draghi said that while the stimulus measures were working, they still needed more time to revive growth and inflation. Data Monday showed German business confidence unexpectedly deteriorated this month, the latest sign that Europe’s largest economy is losing momentum.

“In terms of what central banks can do, we are close to the endgame here, where it is clear that more stimulus does more harm than good,” said Richard McGuire, head of rates strategy at Rabobank International in London. “Lower policy rates are now possibly resulting in lower confidence. There is something seemingly weighing on peripheral debt. Either way it certainly merits a very cautious approach to trading peripheral spreads.”

Spain Political Deadlock May Spur New Elections and Market Woes

April 25, 2016 — 2:18 PM BST
The deadlock between Spanish political parties makes fresh elections almost inevitable as it’s highly unlikely a government can be formed before the May 2 deadline, analysts say.

With polls still suggesting no one party will secure a majority, a fresh vote risks spurring market volatility and wider spreads, especially as Spain will go to the polls just days after the U.K. referendum on EU membership, they add.

The People’s Party or Partido Popular (PP) came first in the election but its share of seats fell to 123 from 186, well short of the 176 seats needed for a majority. The party’s standing has been wracked by a series of scandals but it still retains pole position in recent voter surveys with 126 seats, or 29.5 percent in a poll for El Mundo and 27.7 percent in one for El Pais.

The Socialist party (PSOE), which took second place in December with 90 seats, signed a pact with Albert Rivera’s Ciudadanos (Citizens) party, which came fourth in the general election with 40 seats. Talks between the two and anti-establishment party Podemos to try and form a government came to nothing. Meanwhile, PSOE’s polling shows it holding on to second place with 22 percent and 21 percent of the vote.
Podemos overcame a mid-year slump to claim 69 seats last time around, challenging the Socialists’ traditional monopoly over progressive voters. While polls earlier this month showed it ceding third place to Ciudadanos, the most recent survey for El Mundo shows it with 18.6 percent of the vote and a shared list with the United Left getting the backing of 21.5 percent of voters, a shade shy of second place.

Spanish courts are advancing more than two dozen criminal probes into PP officials and the party’s financing. The party’s acting industry minister quit over his links to an offshore company listed in the Panama leaks. El Pais, Spain’s leading daily, said in an editorial the PP needs to “renew itself thoroughly” without Rajoy.
Corruption allegations buffeting Spain’s political class will boost support for Podemos, the group’s polling chief said in an interview in parliament. Podemos balloted members this month asking if they support either PSOE-Ciudadanos proposal or a progressive govt with PSOE, United Left -- members voted against the first option. Meanwhile, Ciudadanos sees little room for agreement with Podemos.

Spain sets 2016 deficit target for regions at 0.7 percent of their GDP versus 0.3 percent previously, after saying the nation’s 2016 deficit target had been increased to 3.6 percent compared with 2.8 percent agreed with the European union. That comes as Catalan President Carles Puigdemont says his region is still working toward secession.

Ratings company Fitch says lack of clarity over the composition of Spain’s next government adds to uncertainty over fiscal consolidation and today said it expects growth to slow this year relative to 2015.

We close with “what America does today, the rest of the world does tomorrow.” Tomorrow looks set to be quite a challenge on Main Street. Casino capitalism looks increasingly like a dead end, as the Great Nixonian Error of fiat money, communist money, runs out of road.

Retail layoffs in 2016 could be highest since 2010

Published: Apr 25, 2016 11:50 a.m. ET

Bankruptcies and e-commerce shifts are among leading factors

With more than 24,000 retail-sector job cuts already announced in 2016, layoffs are on track to hit their highest since 2010, according to Credit Suisse analysts.

Credit Suisse said in a Monday note there could be more than 37,000 layoffs in 2016 based on Bloomberg data. But analysts there believe that number could top those projections due to the number of retailers filing for bankruptcy recently. About two-thirds of layoffs tend to come in the first one-third of the year.
According to Bloomberg, there were 30,273 layoffs in 2010. There were far fewer each year between 2011 and 2015. Bloomberg generated its figures by culling data from news headlines. Layoffs that didn’t make headline news may not have been included.
Credit Suisse calls the job cuts “almost routine over the past few months,” but “typical during a cyclical downturn.” Layoffs usually take place because of margin pressure and slowing sales. In this case, traditional store-front retailers are also being impacted by the consumer shift to e-commerce.

Among the announcements so far this year, Macy’s Inc. M, -1.54%   said it would cut thousands of jobs, Wal-Mart Stores Inc. WMT, +1.09%   announced Walmart Express closures, which would mean cuts for those workers who weren’t relocated to positions in other stores, and Nordstrom Inc. JWN, +0.81%   said it would cut as many as 400 jobs as it shifts its operating model.

“Most of the layoffs announced year to date are at the store associate level, as a result of retailers closing unproductive stores to ‘right size’ their brick-and-mortar footprint, or as a result of retailers attempting to reduce the number of employees per store,” Credit Suisse wrote. “These layoffs are clearly an attempt to deal with the decline in brick-and-mortar productivity, as brick-and-mortar sales are lost to e-commerce while store expenses grow due to increasing wages.”

On Thursday, Sears Holdings Corp. SHLD, -2.70%  said it would close 68 Kmart stores and 10 Sears locations this summer. Eligible workers will receive severance and have the chance to apply for openings at other locations.

Broadly speaking, real estate research firm Green Street Advisors estimates that there could be 800 department store closures, about one-fifth of the anchor space available in U.S. malls.

Apple investors brace for first decline in iPhone sales

Published: Apr 25, 2016 7:01 a.m. ET

Apple is expected to report iPhone unit sales of 50 million, vs. 61 million last year

Apple Inc. AAPL, -0.57%  is expected to report its first year-over-year decline in iPhone unit sales when it reports second-quarter earnings after the market close on Tuesday.

Several analysts have lowered iPhone estimates in recent weeks, citing weak outlooks from Apple suppliers such as Jabil Circuit Inc. JBL, -0.72%  and Qualcomm Inc. QCOM, -0.40% and checks within Apple’s supply chain that indicate weak iPhone builds.

Analysts on average are expecting Apple to report iPhone unit sales of 50 million for its most recent quarter, which would mark a decline from 61 million in the year-earlier period.

Earlier this week, Raymond James analyst Tavis McCourt lowered his full-year outlook on iPhone sales to 212 million units on “meaningfully lower” average selling prices, which would mark the first time iPhone units have declined on the year. The consensus estimate is calling for iPhone unit sales of 217 million for fiscal 2016, versus 231 million last year.

Compounding these issues are signs people are upgrading their phones less frequently than they used to, a slowdown in demand in China, and expectations that the new iPhone 5SE and Apple Watch are selling below expectations.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose."

John Maynard Keynes.

At the Comex silver depositories Monday final figures were: Registered 31.96 Moz, Eligible 118.95 Moz, Total 150.91 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
More madness in China again, as the Great Nixonian Error of fiat money now causes a China credit bubble in 2016, that’s now spilled over into steel speculation. The boom is back can the bust be far behind?

Warnings Flash for China's Red-Hot Steel Market on 47% Surge

April 25, 2016 — 4:46 AM BST Updated on April 25, 2016 — 9:11 AM BST
Warnings are stacking up fast after China’s eye-popping steel rally. Fitch Ratings Inc. said prices lifted in part by heightened speculation are destined to slump, while a bank in Singapore flagged the risk of a boom-bust cycle reminiscent of China’s equity market.
The rapid advance isn’t sustainable as mills are expected to bring back idled capacity, raising supply, Fitch said in a report on Monday. Price gains have been driven by a seasonal recovery in activity that’s been exacerbated by increased speculation in the futures market, according to analyst Laura Zhai.
Steel prices have surged in 2016, with reinforcement-bar up 48 percent, after policy makers in China talked up growth and added stimulus, helping to lift property prices and ignite a speculative frenzy. The gains have helped to restore mills’ profitability, boosting their incentive to increase output. Singapore-based Oversea-Chinese Banking Corp. warned on Monday that there may be parallels between the sudden jump in steel trading and last year’s performance in equities, citing the potential for a boom-bust scenario.

“The rapid increase in Chinese steel prices so far this year is not sustainable, as it is largely due to a seasonal pick-up in construction and elevated speculation in the steel futures market,” Fitch said. “With prices now surging, many of the suspended plants have resumed production.”

Futures for rebar extended gains on Monday, ending 0.9 percent higher at 2,643 yuan ($407) a metric ton on the Shanghai Futures Exchange. The price of the product used to strengthen concrete advanced for an 11th week through Friday, adding 14 percent.
Steel output in the world’s largest supplier may see a further increase this month as more furnaces are fired up, according to Fitch. Production in March rose 2.9 percent to a record 70.65 million tons from a year earlier, according to figures from the National Bureau of Statistics. 
The rich man in his castle,
The poor man at his gate,
Greenspan [your central bankster here]  made them high and lowly,
And disordered their estate.
With apologies to All Things Bright and Beautiful.

Brexit Quote of the week.

Freedom is the right to tell people what they do not want to hear.

George Orwell.

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?

Ikea starts selling solar panels in UK stores

Swedish firm is optimistic of sales despite recent cuts to solar incentives
Monday 25 April 2016

Solar panels will join tea lights and spider plants on sale at Ikea stores from Monday, despite huge government cuts to solar subsidies for homeowners.

Shoppers will be able to order panels online and at three stores, initially Glasgow, Birmingham and Lakeside, before the so-called Solar Shops appear in all the Swedish company’s UK stores by summer’s end.

Ikea’s new foray with energy company SolarCentury marks its second attempt to sell solar panels, after a two-year pilot with Chinese company Hanergy ended last year.

The company maintains that despite low wholesale electricity prices and ministers’ 65% cut to solar incentives, after which new solar installations have crashed in the past two months, the technology makes sense for British householders.

“Obviously the climate has been changing in the past year in the UK but, nonetheless, our research showed a third of homeowners would really like to invest in solar, and the majority of those are driven by the opportunity to save money,” said Joanna Yarrow, head of sustainability at Ikea UK and Ireland.

“Even though the feed-in tariff rate has come down, you’re still going to get a 6% rate of return on a solar installation, you’re not going to get that return on an ISA.” She admitted it was “depressing” to see the recent 75% fall in solar power capacity installed by homeowners but said “we see solar as the future”.

Research by Ikea found of the one-third of people who wanted solar, 60% did so because of savings on electricity bills, and that the average solar install should cut buyers’ electricity bills by half. A typical system for a semi-detached house with 10 panels would cost from £4,550, the company said.

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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