Baltic Dry Index. 539 +22 Brent Crude 41.94
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.
“I'm
not lost for I know where I am. But however, where I am may be lost.”
Dodgy
Dave Cameron, with apologies to A.A. Milne, and Winnie-the-Pooh
With
the Spring Meetings of the IMF and World Bank in Washington April 15-17, about
to be held against a deteriorating global economic background, both groups were
fast off the mark to get in their warnings of trouble ahead. Both have now
painted the record for posterity, technically known in the Dismal Science, as
covering their rears.
We
open with the IMF and WB markers.
A large Bank is exactly the place where a vain and shallow person
in authority, if he be a man of gravity and method, as such men often are, may
do infinite evil in no long time, and before he is detected. If he is lucky
enough to begin at a time of expansion in trade, he is nearly sure not to be
found out till the time of contraction has arrived, and then very large figures
will be required to reckon the evil he has done.Walter Bagehot. Lombard Street. 1873
Negative rates could fuel fresh 'boom and bust', IMF warns
10 April 2016 • 8:00pm
Negative interest rates could fuel another dangerous “boom and
bust” cycle if policymakers start to rely on them to boost growth, the
International Monetary Fund has warned.
The IMF said a prolonged period of sub-zero rates could even spark a
public backlash if banks started to charge savers to hold their cash.
Its financial stability chief said negative rates posed a
“significant profitability challenge” for some commercial banks that could lead
to “excessive risk taking”.
“As banks’ margins are squeezed, they may start lending to riskier
borrowers to maintain their profit levels,” José Viñals wrote in a blog.
“Banks may also be encouraged to rely more on cheaper but volatile
wholesale funding sources. Weak loans could become harder to detect, and vital
corporate restructuring could be delayed.
“Negative interest rates may induce boom and bust cycles in asset
prices.”
Negative deposit rates have been introduced by six central banks since
2012.
While the Fund said it “tentatively” supported the policy, its head
of financial stability said “close monitoring and supervisory scrutiny” of
the possible unintended consequences was warranted.
“Overall, [negative rates] help deliver additional monetary stimulus and
easier financial conditions, which support demand and [stable inflation],” said
the IMF.
“Still, there are limits on how far and for how long negative policy
rates can go.” The IMF said households could start to question the policy if
they had to pay fees on their savings.
“The public may feel that they are being 'taxed’ if and when deposit
rates increasingly turn negative,” it said.
While the IMF noted that negative rates had helped to boost credit
growth in the eurozone, it said many banks around the world were reluctant to
slash retail deposit rates into negative territory.
----Persistently low or negative rates could also “undermine the viability of life insurers, pensions and savings vehicles” which would “force losses on life insurance policy holders”, the IMF warned.
IMF researchers noted that households, businesses and banks would
start to hoard cash if they felt negative rates were the new normal.
More
'No end in sight' for global economic misery, warns World Bank
Szu Ping Chan9 April 2016 •
3:03pm
The global growth slowdown has no end in sight as policymakers drag
their heels on reforms and a “robot revolution” threatens living standards, the
World Bank’s chief economist has warned.
Ahead of the International Monetary Fund and World Bank Spring meetings
this week, Kaukshik Basu said he expected the global economy to expand by just
2.5pc this year.
This is down from the World Bank’s forecast in January of 2.9pc and well
below the 4pc growth seen just before the crisis.However, he was more upbeat about Britain's prospects if it left the European Union, suggesting the country could thrive after a Brexit.
The chief economist indicated that Britain could be better off outside
the EU if it forged new trade ties and cemented old ones.
Speaking in a personal capacity, Mr Basu said “short-term turbulence”
could lead to “improved exports” in the long run.
“You would probably see a short-term fall in exports from the UK, a
weakening in the pound, but that should then cause a pick-up in exports in the
medium term,” he said.
More
Yet
more sign of the commodity depression following China’s Great Malinvestment
Bubble, itself merely the latest, if largest global bubble set off by the Great
Nixonian Error of fiat money, August 15, 1971.
£2billion fiasco as huge recycling plant dumped: Hundreds of workers facing the sack as PFI facility is shut down leaving thousands of tons of waste destined for landfill
A pair of UK's largest plants to close, leaving over 250 facing redundancy
Closure of the facilities in Lancashire described as ‘catastrophic' failures
Industry leaders warn other plants across the UK could suffer same fate
It was hailed as an environmentally friendly way of
disposing of thousands of tons of household waste.
But only nine years after a £2 billion private
finance initiative (PFI) contract was signed, two of Britain’s biggest
recycling plants are set to close, leaving more than 250 workers facing
redundancy.
Residents have been told that much of the rubbish
they laboriously sort into separate containers for collection will now be
dumped in landfill sites rather than being segregated and reused.
The closure of the facilities in Lancashire has been described as a ‘failure of catastrophic proportions’.
But industry leaders warn that other recycling
plants across the UK could suffer the same fate or not be replaced at the end
of their natural life because of financial pressures on local authorities.
When the 25-year PFI Lancashire deal was agreed in
2007, Global Renewables – the Australian-owned company behind the project –
said it would treat 300,000 tons of domestic rubbish each year by extracting
plastic, metal and glass, and turning garden waste into high-quality compost
for land restoration and the planting of 2.5 million trees
The company claimed it would handle enough rubbish
to fill Manchester United’s Old Trafford ground nearly 100 times over, and even
consulted environmental pressure group Friends of the Earth during the planning
stage.
But two years ago, Lancashire County Council was
forced to cancel the PFI initiative and take control of the business because it
was losing so much money.
The final blow came last week when it was confirmed
the plant is to be mothballed this summer and turned into what one leading
critic calls ‘the most expensive waste transfer station in Europe’.
Instead of material being treated on site, it will
be taken by road to other locations for recycling or dumped in holes in the
ground, contravening Government and EU rules aimed at reducing the quantity of
rubbish that ends up as landfill.
----Local Tory
councillor Michael Green said last night that the operation had damaged the
environment by inflicting noise and foul smells on people living nearby.
‘We were told when the plan was proposed that
recycling was the way forward and this was the only show in town. We were
assured the plant would be technologically advanced and people had nothing to
worry about. But there has been a catalogue of errors and even prosecutions by
the Environment Agency over pollution.
‘Until four years ago it was costing taxpayers
£2million a week to keep the plant running. Now they are mothballing the
operation and turning it into the most expensive waste transfer station in
Europe. Some of the initial sorting will still be done there but a lot of the
waste will be shipped out for processing elsewhere or sent to landfill
For years we have been encouraging residents to
recycle. It is failure of catastrophic proportions.’
The initial agreement was intended to process the
household waste of 1.4 million people.
Jacob Hayler, of the Environmental Services
Association, said: ‘These are difficult times for the recycling industry
because commodity prices have fallen dramatically. When local authorities
entered into deals of this kind, there was no expectation the price of plastic,
metals and paper might drop so far.
‘There is less of a case to invest in recycling so
there could be more closures.’
More
We end for this wet Monday morning, in the oil patch. Whether we
get some sort of production cap later in
the week or not, Bloomberg reports that Saudi Arabia, Kuwait and the UAE, are
going all out to dominate next decade’s crude oil production. But before that,
Sunni oil now seems to be trying to take down Shia oil in 2016. Synthetic
double options seem to be the play in 2016. Elsewhere, Moody’s lowered the
rating on big oil. US frackers are toast.
Saudi Oil Gambit Moves to Phase Two
By
Julian
Lee Apr 10, 2016 8:00 AM GST
There's an oil supply crunch looming and Saudi Arabia and its local
allies are positioning themselves to take advantage.In what would be the second phase of the kingdom's strategy to defend its market share against rival producers (most visibly U.S. shale), Gulf states are planning to raise output capacity to fill the hole left by the lack of investment in new projects elsewhere.
It may seem odd talking about an oil shortage when the world seems awash with the stuff and storage tanks are brimming, but listed oil companies are slashing spending for the second year running, leading the International Energy Agency's Neil Atkinson to warn of possible oil-security surprises in the “not too distant” future.
There are too few new projects being sanctioned by non-state oil companies to offset the inevitable decline in output from existing fields and to meet additional demand. This is expected to increase by 1.2 million barrels a day each year for the rest of the decade. New fields due to start producing this year and next are the result of investment decisions taken when oil was about $100 and expected to stay there.
The collapse in company spending is illustrated perfectly by the level of drilling activity. After all, if you don't drill, you can't get the oil out of the ground.
In March, the worldwide rig count hit its lowest level since September 1999
Baker Hughes updated its monthly international drilling statistics last
week. Unsurprisingly, they showed another steep drop in rigs drilling for
oil, a 12 percent decline between February and March. There were 1,551
rigs active last month in the countries covered by Baker Hughes, the
least since September 1999 and down nearly 60 percent in little more than
a year.
But one part of the world is bucking the trend and drilling furiously to
add the capacity needed when demand once again exceeds supply. Three countries
on the Arabian Peninsula -- Saudi Arabia, Kuwait and the United Arab Emirates
-- are seeing near-record drilling rates.
All three saw drilling reach at least 20-year records in 2015 and
activity remains close to that peak. An expansion at Saudi Arabia's
Shaybah field should add 250,000 barrels a day as early as June, while the
Khurais field could contribute another 300,000 barrels by the end of 2017.
State-owned Saudi Aramco says this will let it ease pumping from
older fields yet maintain a production capacity of more than 12 million
barrels per day, 2 million barrels above its current rate.
For Kuwait and the U.A.E., the goals are even higher. Kuwait
plans to raise production capacity by 5 percent from 3 million barrels
a day by the third quarter, and to reach 4 million barrels by 2020. Abu
Dhabi means to lift production capacity to 3.5 million barrels a
day by 2017 from about 3 million.
More
Three Oil Majors Have Debt Ratings Cut by Moody's on Price Rout
April 8,
2016 — 10:34 PM BST Updated on April 9, 2016 — 12:11 AM BST
Three of the world’s largest energy companies had their credit ratings
lowered by Moody’s Investors Service on the expectation that oil prices will
stay low for longer and cause leverage concerns.
Chevron Corp. and Royal Dutch Shell Plc had their ratings reduced by one
level, while Total SA’s was cut two steps, according to statements by the New
York-based rating company on Friday. Chevron will generate negative cash flow
amid rising debt for at least the next two years, while Shell will have
elevated leverage following its acquisition of BG Group Plc, Moody’s said.
Prices are expected to stay low through this year and next and continue to
pressure Total’s operating cash flows and credit metrics, Moody’s said.
Oil companies big and small are having their credit ratings cut as the
collapse in crude prices reduces cash flows and limits their ability to sustain
debt payments. Prices in New York are down by more than 60 percent from a
mid-2014 peak.
Chevron and Shell’s ratings were lowered to Aa2, the third-highest
grade, from Aa1. Total’s rating was brought down to Aa3, from Aa1. BP Plc’s
rating was confirmed at A2, as its credit metrics and business profile compare
favorably with its major oil peers and the July 2015 settlement over the
Macondo spill reduced legal uncertainties and gave clarity on its business,
Moody’s said.
More
The
good times too of high price almost always engender much fraud. All people are
most credulous when they are most happy; and when much money has just been
made, when some people are really making it, when most people think they are
making it, there is a happy opportunity for ingenious mendacity. Almost
everything will be believed for a little while, and long before discovery the
worst and most adroit deceivers are geographically or legally beyond the reach
of punishment.
Walter Bagehot. Lombard Street. 1873
At
the Comex silver depositories Friday final figures were: Registered 32.45 Moz, Eligible 122.79 Moz, Total 155.24 Moz.
Crooks and Scoundrels Corner
The bent, the seriously bent, and the totally
doubled over.
Today, the dump. The coming Chinese dump of just
about everything that is.
Here It Comes—-China’s Monumental Dump Of Surplus Steel, Aluminum And Other Industrial Commodities
by Business Insider • April 8,
2016
The world is about to have a good old-fashioned glut on its hands, courtesy
of China’s problematic economy.And the world is already starting to feel the pain.
The problem is that China’s got too many companies producing things like coal and steel, and the state-owned enterprises (SOEs) doing this have racked up debt that’s now eating up their profits.
The government is trying to shift the whole economy from its dependence on manufacturing, and it has already said that millions of people in some of these industries are going to be laid off in the next few years.
But China can’t just shutter these companies overnight, because they still need to pay back the banks holding their debt and it would be an unmitigated disaster for employment.
So these products have to go somewhere, and that means they’re going to be exported to the world. There are a bunch of industries that need this treatment too.
China’s crude steel, aluminum, shipbuilding, chemicals, cement, refinery products, flat glass, and paper will all have to be unloaded on the world, whether the world needs them or not. (Mostly not.)
The steel industry already offers a good example of what might be in store because China has made the most progress in dealing with that industry’s problems.
Let’s put it this way: You know a problem is serious when China’s tightly controlled state media outlets are allowed to talk about it in blunt terms. Here’s Xinhua:
Sagging demand has already impacted China’s steel industry. The State Council, China’s Cabinet, announced earlier last month that crude steel production capacity will be slashed by 100 million tonnes to 150 million tonnes over the next five years.
The situation is so severe that the government predicts some 500,000 workers in the industry will be laid off.
In 2015, China produced about 804 million tonnes of crude steel, but only 664 million tonnes of steel products were consumed last year, according to the government-led agency China Metallurgical Planning and Research Institute.
This is the government getting the people ready for job losses and, in some cases, relocation. Former steelworkers are already being turned into security guards and cleaners. Otherwise, workers will be out of a job, collecting checks from federal authorities.
So problem acknowledged, right?
Yes, but it doesn’t mean anything’s going to happen soon (back to that needing to pay down the debt issue). China’s biggest steelmaker, Baosteel, is still planning to increase output by 20% in 2016.
And all of that supply is about to be unloaded onto a world that doesn’t really need it right now.
---- China has only just begun to unload its excess supply on the world, so this unloading process is only going to get worse. It’s only going to spread to more industries and impact more countries.
And it won’t stop until the world has sopped it all up.
More
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?
Film breakthrough for flexible solar power and LED lighting
April 6, 2016
Updated 2 days ago
A roll-to-roll production technique, similar to the way newspapers are
printed, could offer a future of cheap, flexible solar cells and LED lighting
panels. The breakthrough, the result of three years of research, is now “ready
to market”, according to the project participants.
The Treasores project was led by scientist Frank Nüesch from Empa, the
Swiss federal laboratories for material science and technology, with the
combined expertise of nine commercial companies and six research institutes in
five countries.
Treasores (an acronym for Transparent Electrodes for Large Area Large
Scale Production of Organic Optoelectronic Devices) began in November 2012 with
the aim of developing technologies to reduce the production cost of organic
electronic devices such as solar cells and LED lighting. The project was funded
with 9 million euros ($10.2 million) from the European Commission and an
additional 6 million euros ($6.8 million) from the project partners.
The research has yielded seven patent applications, papers in a dozen
peer-reviewed journals and provided inputs to international standards
organizations.
The project has developed and scaled-up production processes for several
new transparent electrode and barrier materials for use in the next generation
of flexible electronics.
Already under commercial production – or due for production this year –
are electrodes-on-flexible substrates that use either carbon nanotubes, metal
fibers or thin silver. The new electrodes have been tested with several types
of optoelectronic devices using rolls of over 100 meters in length.
The roll of OLED light sources pictured, showing the project logo, was
made using roll-to-roll techniques at Fraunhofer Institute for Organic
Electronics, Electron Beam and Plasma Technology (Fraunhofer FEP) in Germany on
a thin silver electrode developed within the project by the German firm Rowo
Coating.
The electrodes on the new films are technically at least as good as
those currently made from indium tin oxide (ITO) but will be cheaper to
manufacture and will not require the importation of indium.
Fraunhofer FEP’s Tomasz Wanski said that the new electrodes create an
OLED light source that is very homogenous over a large area, achieving an
efficiency of 25 lumens per watt. This level of efficiency is as good as the
much slower sheet-to-sheet production process for equivalent devices.
New test methods developed by the United Kingdom's National Physical
Laboratory, in the course of the project, made sure that the electrodes would
still work after being repeatedly bent – a test that may become standard in the
field.
A further outcome of the project has been the development, testing and
production scale-up of new approaches to transparent barrier foils (plastic
layers that prevent oxygen and water vapor from reaching the sensitive organic
electronic devices).
High performance low-cost barriers were produced by the Swiss company
Amcor Flexibles Kreuzlingen and it is expected that the company will adopt this
technology after further development. Such high performance barriers are
essential to achieve the long device lifetimes that are necessary for
commercial success.
U.K.-based solar power firm, Eight19, was one of the project’s technology
partners. Michael Niggeman, Eight19’s chief technology officer, said: “The
Treasores project was a success for Eight19 as it made a significant
contribution to the reduction in manufacturing cost of Eight19’s plastic solar
cells.
“This was achieved through the customized development and up-scaling of
low-cost barriers and electrodes in the project consortium. It is an essential
step towards the commercialization of Eight19’s organic photovoltaics based on
technology developed and produced in Europe.”
http://www.plasticsnews.com/article/20160406/NEWS/304079999/film-breakthrough-for-flexible-solar-power-and-led-lighting
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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