Tuesday, 19 April 2016

When the Wheels Start Flying Off.

Baltic Dry Index. 659 +24      Brent Crude 42.75

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.
"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 Johnny Foreigner dumping Uncle Scam’s stocks. But on ZIRP and NIRP corporate buybacks are hiding the damage for now. That this can only end badly goes without saying. The only question is when. Our deluded central banksters have not only set off the most gigantic global malinvestment bubble in history, thanks to the Great Nixonian Error of fiat money, communist money, but thanks to rigged almost non-existent interest rates, at least to the cronies of the central banksters at the Fed, they have also set in motion a massive debt for equity scam, that has to blow up as soon as interest rates normalise, not that the Fed dare normalise interest rates at any time before the US Presidential election. But new Presidents try to get all the pain over in the first two years so as to be ready for their re-election campaign. 2017 looks to be that year of massive pain. 
Getting out early always beats getting carried out last. Johnny Foreigner is getting out early.

Chinese investors dump U.S. stocks, but corporate buybacks offset losses

Published: Apr 18, 2016 10:28 p.m. ET

U.S. corporate stock repurchases to total $450 billion in 2016

Last year, Chinese investors dumped nearly all the stocks that they had acquired over a span of seven years and are likely to remain cautious this year amid ongoing financial market volatility at home. But aggressive stock buybacks by U.S. companies flush with cash will likely offset the sting of waning Chinese appetite, according to Goldman Sachs.

China accounted for $96 billion in sales of U.S. stocks in 2015, wiping out almost all of the $97 billion purchased between 2008 and 2014, said David Kostin, chief U.S. strategist at Goldman Sachs, in a recent report. That is more than half of the $171 billion in U.S. equities sold by foreigners last year with much of the Chinese exodus occurring in the fourth quarter.

“Investors in China also sold $130 billion of U.S. debt securities in 2015, suggesting an overall reduction in U.S. investment from China rather than a rotation from U.S. equities to bonds,” he said.

The steady decline in oil prices accelerated U.S. stock sales with outflows from Canada and the Middle East hitting their highest levels since 2004.

Canadians sold $80 billion in U.S. stocks, contrasting with $3 billion in purchases in 2014. Investors from the Middle East sold $39 billion worth last year, nearly doubling the $20 billion in sales in 2014.

----Goldman Sachs estimates that international investors will divest a total of $50 billion worth of equities this year, the second year in a row that foreigners are net sellers.

Still, corporate buybacks are expected to more than make up for dwindling foreign interest with U.S. companies projected to repurchase $450 billion in shares this year. That is below 2015’s $561 billion but above the average of $360 billion buybacks between 2011 to 2015.
In the EUSSR that Dodgy Dave and Chancellor Boy George say are vital to our continued existence, albeit as serfs to our betters in Berlin and Brussels, reality is far from the rosy picture painted by Dodgy Dave and his American sidekick Barry Kenya.
UK Boy Chancellor Ozzie and his dismal science lads and ladettes at the Treasury are operating on Virtual Reality = Artificial Inteligence x Chaos Theory. His results speak for themselves. Chaos = his Virtual Reality divided by his Artificial Inteligence.

Atlas and the Herculean Task of Saving Italy's Banking System

April 19, 2016 — 4:00 AM BST
For a sign of the distress in Italy’s financial system, look at some of the banks that are being called upon to contribute to Atlante, the government-orchestrated fund devised to save ailing lenders.

Banca Monte dei Paschi di Siena SpA, which was twice bailed out and has unsuccessfully sought a buyer for 18 months, is chipping in 50 million euros ($57 million). Banca Carige SpA, the Genoa-based lender that’s leaking deposits and scrambling to meet the European Central Bank’s demand for a new funding plan, is providing as much as 20 million euros.

Prime Minister Matteo Renzi and Italian banking authorities are calling for these lifelines as they race to shore up a financial system burdened by 360 billion euros of doubtful loans, an amount equivalent to almost a quarter of the nation’s gross domestic product. And even if the rescue fund of about 5 billion euros unveiled last week does stabilize the system -- which analysts have questioned given its small size -- rooting out the poor governance and lending practices that created the mess remains a herculean task.

"It’s necessary to have some form of bailout to save the banking system, but at the same time you have to fix the deeper problems," says Luigi Zingales, a finance professor at the University of Chicago’s Booth School of Business. "You can’t have one without the other."

Unlike in Ireland, Spain or the U.K., the Italian banking system’s woes weren’t born out of a real estate bubble. Instead, they built up over decades, partly as regional and local lenders used loans to curry favor and exert influence, often with little accountability.

“While formal underwriting methodologies existed, many bankers knew how to circumvent the system,” says Marco Elser, the head portfolio manager at Lonsin Capital Ltd., a London-based asset-management firm. 
“This is the main reason why we have so many problem debts inside the aching stomachs of Italian banks.”

----By the time government ministers, Bank of Italy officials and senior executives convened a meeting in Rome on the evening of April 11, the stocks of Italian banks had slid an average of 44 percent this year, erasing more than 40 billion euros in market value, according to Bloomberg Intelligence data. That night, officials unveiled an experimental fund designed to save the banks and comply with the new bail-in rules.

Backed with contributions from lenders led by UniCredit SpA and Intesa Sanpaolo SpA, the fund can buy shares of troubled banks trying to raise capital and help them sell bad debt through securitizations. The program is dubbed Atlante, the Italian word for Atlas, the Greek titan fated to hold up the heavens for eternity. Clearly, the fund’s sponsors are hoping it won’t take nearly that long to rekindle confidence in Italy’s banking system.

In a first step, Atlante said on Monday it will buy any unsold shares in the 1.8 billion-euro stock sale of Banca Popolare di Vicenza SpA, a troubled lender in northeastern Italy. The offering is scheduled to begin this week after an ultimatum from the ECB to increase capital.

 “Without the fund, Vicenza would risk a bail-in, an event that would hit the entire Italian banking system and possibly lead to a domino effect,” says Gianluca Ziglio, a strategist at Sunrise Brokers LLP, a derivatives dealer in London.
Even so, some investors doubt the fund, at an estimated 4 billion euros to 6 billion euros, is big enough to address a 360 billion-euro problem.

Draghi's Low Rates Leave Germans Worried About Dwindling Savings

April 18, 2016 — 11:01 PM BST
German pensioner Dorothea Dahm spent decades diligently putting away for retirement and never really worried about it -- until European Central Bank President Mario Draghi’s zero-interest rate policy hit her savings.

“My generation was raised with the belief that we should save money for uncertain times and to help the next generation,” the 68-year-old former advertising executive said by phone from her home in the western German town of Flammersfeld. The lack of interest income these days on savings accounts as a result of ECB monetary policy is “very discomforting,” she said.

The ECB’s record-low rates have cost Germans -- who are generally more conservative with their money and therefore more likely to stick it in savings accounts than real estate or the stock market -- 125 billion euros ($141 billion) in interest income since Draghi took over in 2011, according to analysis by Deutsche Postbank AG. Finance Minister Wolfgang Schaeuble said this month that concern about Draghi’s policies has stoked distrust of European institutions and handed fodder to populist groups like Alternative for Germany, or AfD. The party last month grabbed voters from Chancellor Angela Merkel’s Christian Democratic Union in three state elections.

“The issue has the potential to become politically explosive,” Marcel Fratzscher, president of the DIW economic research institute in Berlin, said regarding savings. “The German economy seems to be doing fine and that’s why many elderly people ask themselves: Why can’t I benefit from that?”
The government has taken notice, giving retirees in 2016 a more than 4 percent pension increase, the biggest in 23 years. Concerns over savings and pensions strike a nerve especially in Germany, which has a rapidly aging population, meaning that in the future there will be far fewer workers to support retirees and those currently working need to sock away more money to care for themselves. Eckhardt Rehberg, budget affairs spokesman for Merkel’s caucus in parliament, said he gets about a dozen letters a week from voters worried about their savings.

“The letters are sometimes very emotional, often handwritten and rarely exaggerated,” Rehberg said. "You have to take peoples’ concerns seriously.”

Draghi cut the ECB’s benchmark rate to zero and deposit rate to minus 0.4 percent in March, and a Bloomberg survey of economists published Monday showed most think he’ll ease policy again after the summer. No new measures are predicted at the next rate decision on Thursday. Many Germans say the central bank is ignoring their interests to bolster economically weaker countries in the 19-member euro area.

Dodgy Dave Cameron: Has no one considered my feelings in all this?
Juncker: What percentage do you want?
Dodgy Dave Cameron: I don't want money. I'm an honest man.
Juncker: You'll have to mend your ways then. This is the EUSSR!
With apologies to Joe Orton and Loot.
At the Comex silver depositories Monday final figures were: Registered 32.68 Moz, Eligible 120.78 Moz, Total 153.46 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today Project Fear and Brexit.

The Government is doing everything in its power to rig the EU Referendum 

Norman Tebbit18 April 2016 • 9:29am
Spare us another couple of months of hair-raising panic attacks by Remainers like Stephen Crabb for whom the days when the British people used to make their own laws and elect their own governments where back in the dark ages, indeed before he had even started school.

Beware of the reckless fools who advocate Brexit, he warns us. Should we leave the EU he says, our unemployment rate would soar to match those in Greece and Spain. What is more, he quotes all those wise men of the grand economic forecasting who failed to see the last great financial crisis coming, but kept their jobs to get it wrong again.
Well, I offer him and all his Remain colleagues a warning given by Gladstone 125 years ago:
 "The finance of the Country is intimately associated with the liberties of the Country. It is a powerful leverage by which English liberty has been gradually acquired ... It lies at the root of English liberty, and if the House of Commons can by any possibility lose the power of the grants of public money your very liberty will be worth very little in comparison ... That powerful leverage has been what is commonly known as the Power of the Purse, the control off the House of Commons over public expenditure, the root of English Liberty." 
Gladstone ended with a final warning: "If these powers of the House of Commons come to be encroached upon, it will be by tacit and insidious methods, and therefore I say that attention should be called to this." 
And during Mr Crabb's lifetime how those liberties have been encroached upon?
How many of those eminent persons and institutions now forecasting disaster should we dare to reclaim our right to govern ourselves were, not long ago, forecasting disaster unless we joined the eurozone? 
But nothing restrains the audacity of the Remain faction of our deeply divided Government. 
Last week, just before the rules imposing limits on expenditure by the authorised Referendum campaign organisations, that faction splurged more than £9 million on the distribution of its dodgy dossier to every household in the country. More than Vote Leave, the Brexit campaign, will be allowed to spend in the ten weeks of the campaign.

It would have been far more informative and certainly more fair had Mr Cameron admitted that the laws made in Brussels override our UK law made in our Parliament and that our "Supreme" Court is inferior to the European Court.

The Government has done everything it can to rig the whole campaign to favour the Remain campaign, but despite that, the polls (for what they are worth) suggest that the two sides are pretty evenly divided and that the outcome may yet be decided by events between now and the referendum.

My take: Dodgy Dave tried and completely failed to get meaningful concessions from the EUSSR and even the ones he got were repudiated by Schultzy, head of the EU parliament as being “non binding.” Promising "prosperity in our time" Dodgy Dave now leads a campaign whose only message is that GB is too weak and pathetic to survive outside of the unwelcoming arms of the EUSSR. If we remain, we must rely on the charity of EU strangers, as the best we can do in this world. But remaining guarantees that the UK will be swamped in immigrants from the EU.

Most of the world learns English as a second language including in Turkey, and that makes most EU immigrants likely to head to GB, even if only as a stepping stone to America, Australia and Canada. We have to leave to protect our children and grandchildren's future.

But dodgy Dave is quite wrong about our future outside of the EUSSR. GB is a well educated, hard working, innovative, inventive, entrepreneurial, democratic nation with a proud history of leading in many areas and sectors of industry, trade and research. The successors of the people that stood alone against Hitler for a year, until Hitler made the mistake of attacking the USSR, need no lectures from Barry Obama and his meddling in British interests.

Britain invented, designed, built, and delivered the Mulberry Harbours to the D-Day beaches, making the landings a success, and rescuing Continental Europe. GB invented the modern steam turbine that ushered in the Electric Age and changed shipping forever. The TV. The jet engine. The computer. GB will do just fine inside our outside the EU, but outside is far better and safer.

Brexit Quote of the week.

"On the whole Dodgy Dave want to be good, but not too good, and not quite all the time.”

With apologies to 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?

'Odd couple' monolayer semiconductors align to advance optoelectronics

Date: April 15, 2016

Source: Oak Ridge National Laboratory

Summary: Scientists synthesized a stack of atomically thin monolayers of two lattice-mismatched semiconductors and created an atomically thin solar cell.
Epitaxy, or growing crystalline film layers that are templated by a crystalline substrate, is a mainstay of manufacturing transistors and semiconductors. If the material in one deposited layer is the same as the material in the next layer, it can be energetically favorable for strong bonds to form between the highly ordered, perfectly matched layers. In contrast, trying to layer dissimilar materials is a great challenge if the crystal lattices don't match up easily. Then, weak van der Waals forces create attraction but don't form strong bonds between unlike layers.
In a study led by the Department of Energy's Oak Ridge National Laboratory, scientists synthesized a stack of atomically thin monolayers of two lattice-mismatched semiconductors. One, gallium selenide, is a "p-type" semiconductor, rich in charge carriers called "holes." The other, molybdenum diselenide, is an "n-type" semiconductor, rich in electron charge carriers. Where the two semiconductor layers met, they formed an atomically sharp heterostructure called a p-n junction, which generated a photovoltaic response by separating electron-hole pairs that were generated by light. The achievement of creating this atomically thin solar cell, published in Science Advances, shows the promise of synthesizing mismatched layers to enable new families of functional two-dimensional (2D) materials.
The idea of stacking different materials on top of each other isn't new by itself. In fact, it is the basis for most electronic devices in use today. But such stacking usually only works when the individual materials have crystal lattices that are very similar, i.e., they have a good "lattice match." This is where this research breaks new ground by growing high-quality layers of very different 2D materials, broadening the number of materials that can be combined and thus creating a wider range of potential atomically thin electronic devices.
"Because the two layers had such a large lattice mismatch between them, it's very unexpected that they would grow on each other in an orderly way," said ORNL's Xufan Li, lead author of the study. "But it worked."
The group was the first to show that monolayers of two different types of metal chalcogenides -- binary compounds of sulfur, selenium or tellurium with a more electropositive element or radical -- having such different lattice constants can be grown together to form a perfectly aligned stacking bilayer. "It's a new, potential building block for energy-efficient optoelectronics," Li said.
Upon characterizing their new bilayer building block, the researchers found that the two mismatched layers had self-assembled into a repeating long-range atomic order that could be directly visualized by the Moiré patterns they showed in the electron microscope. "We were surprised that these patterns aligned perfectly," Li said.
Researchers in ORNL's Functional Hybrid Nanomaterials group, led by David Geohegan, conducted the study with partners at Vanderbilt University, the University of Utah and Beijing Computational Science Research Center.
"These new 2D mismatched layered heterostructures open the door to novel building blocks for optoelectronic applications," said senior author Kai Xiao of ORNL. "They can allow us to study new physics properties which cannot be discovered with other 2D heterostructures with matched lattices. They offer potential for a wide range of physical phenomena ranging from interfacial magnetism, superconductivity and Hofstadter's butterfly effect."

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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