Tuesday, 3 May 2016

Asia In Rising Trouble.

Baltic Dry Index. 703       Brent Crude 46.22

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

Brexit odds checker.

Brexit Quote of the Day.
Dodgy Dave:  a hypocrite in public life, the world will be puzzled to decide whether you are an apostate or an impostor, whether you have abandoned good principles, or whether you ever had any?

With apologies to Thomas Paine on George Washington.

“How’m I doin’?” New York City Mayor Ed Koch famously used to ask passers-by on the subways he rode all the time. Well liked, he usually got a favourable response. Were Asia to ask that question this morning, the response would not be so favourable. Asia seems to be in trouble, and rising trouble at that. Below, how Asia is doin’, as we go deeper into Q2 16. Stay long fully paid up physical gold and silver. Fiat money isn’t working like it used to. When Asia sneezes….
“The boom can last only as long as the credit expansion progresses at an ever-accelerated pace. The boom comes to an end as soon as additional quantities of fiduciary media are no longer thrown upon the loan market.”

Ludwig von Mises.

China's Caixin manufacturing PMI slips again

Published: May 2, 2016 10:34 p.m. ET
BEIJING--A private gauge of nationwide factory activity in China fell to 49.4 in April from 49.7 in March, Caixin Media Co. and research firm Markit said Tuesday.

The reading points to a continued deceleration in China's manufacturing activity and marks the 14th month in a row that the index has languished in contractionary territory. A reading below 50 indicates a contraction in manufacturing activity from the previous month, whereas a reading above that level indicates an expansion.

China's official manufacturing PMI, a competing gauge, came in at 50.1 in April compared with 50.2 in March, according to data from the National Bureau of Statistics on Sunday.

"All of the index's categories indicated conditions worsened month-on-month, with output slipping back below the 50-point neutral level," said He Fan, chief economist at Caixin Insight Group.

"The fluctuations indicate the economy lacks a solid foundation for recovery and is still in the process of bottoming out. The government needs to keep a close watch on the risk of a further economic downturn." Mr. He said.

The Caixin China Manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives at more than 400 manufacturing companies.

China new loan surge does not augur massive stimulus: Xinhua commentary

Mon May 2, 2016 3:02am EDT
A surge of new loans granted in China over the first quarter does not mean the country is about to embark upon another massive economic stimulus program, the official Xinhua news agency said in a commentary on Monday.
China last month posted its slowest economic growth since 2009 but a surge of new debt appears to be fuelling a recovery in factory activity, investment and household spending in the world's second largest economy.
Official datahttp://images.intellitxt.com/ast/adTypes/icon1.png in April 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.
Chinese banks extended 1,370 billion yuan ($211.23 billion) in net new yuan loans CNNYL=ECI in March, exceeding analyst expectations and the previous month's lending of 726.6 billion yuan.
But the sudden rise prompted concerns that Beijing is falling back on methods it used to get out of the global financial crisis: massive spending on infrastructure, real estate, and industrial capacity that produced low or no returns but saddled Chinese banks with non-performing loans.
Local government financing vehicles (LGFVs), which Chinese cities use to circumvent official spending limits, raised at least 538 billion yuan in bonds in the first quarter, up 178 percent from a year earlier and the highest quarterly issuance since June 2014, Everbright Securities said, quoting figures from privately held financial data provider WIND.
Xinhua, in an English-language piece, said the loans data had "fanned speculation that the government may turn to a massive stimulus program, a move that would pose a risk to global financial market".
But adopting an "accommodative policy" to help slowing growth was normal and China would keep doing it, Xinhua said.
"China will not resort to largehttp://images.intellitxt.com/ast/adTypes/icon1.png stimulus measures; policymakers are more than aware of the consequences of such a short-sighted program. Moreover, the country is still addressing the side effects of the previous stimulus package, such as overcapacity," it added.

Japan final April manufacturing PMI hits lowest since Jan 2013 after Kumamoto earthquake

Sun May 1, 2016 10:11pm EDT
Japanese manufacturing activity contracted in April at the fastest pace in more than three years and output fell the most in two years, a final survey showed on Monday, after earthquakes halted production in the southern manufacturing hub of Kumamoto.
The Markit/Nikkei Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 48.2 in April, which was above the preliminary reading of 48.0 but still below a final 49.1 in March.
The index remained below the 50 threshold that separates contraction from expansion for the second consecutive month and showed activity contracted the most since January 2013.
The output component of the PMI index also fell to 47.8, versus a flash reading of 47.9 a final 49.8 in the previous month to show the fastest contraction since April 2014.
On April 14, the first of several earthquakes struck Kumamoto, which damaged houses, caused landslides and halted production at electronics and car parts factories in the area.
Many companies have resumed production in Kumamoto, and economists say if this trend continues then Japan should be able to quickly shake off the impact on factory output.

Foundering Hanjin Shipping seeks debt relief

Published: May 2, 2016 11:13 p.m. ET
SEOUL-- Hanjin Shipping Co., South Korea's largest container operator by capacity, reached out to owners of its chartered fleet and terminal operators to say it can't survive unless they help with its debt-restructuring efforts.

In a letter to foreign owners, Chief Executive Suk TaeSHY-soo said the debt-saddled operator faces serious challenges as the global shipping industry is in the doldrums.

"Upon careful analysis of the business outlook and financial projections with the assistance of outside experts, our management has come to the conclusion that our own efforts alone may fall short of fully resolving the liquidity issues that we are facing," the letter said, according to Hanjin spokeswoman Min Park.
Hanjin, a unit of Hanjin Group, which also controls Korean Air Lines Co., last week submitted a formal request to state-run Korea Development Bank, its main creditor, to restructure its debt and provide an aid package in return for asset sales and charter rate cuts.

KDB said it would review the proposal with other creditors and decide by Wednesday whether to offer assistance to Hanjin. Options include a debt rollover. If creditors reject the proposal, the company would be put under court receivership.

Hanjin and its smaller rival, Hyundai Merchant Marine Co., which handle the bulk of South Korea's exports, have been unprofitable for several years, amassing debts as the global shipping market has been faced with excess capacity and plummeting prices.

Sluggish factory activity sets global tone for second quarter

Mon May 2, 2016 6:14am EDT
Asian factories barely grew in April and those in the euro zone did little better despite heavy discounting, setting a sluggish tone on Monday for the global economy in the second quarter.
Japanese manufacturing activity shrank last month at the fastest pace in more than three years as major earthquakes disrupted production, while the former bright spot of India sank to a four-month trough and growth in China was all but flat.
The euro zone reading edged up only marginally, painting a more subdued picture of an economy that grew an encouraging 0.6 percent between January and March.
With manufacturing dogged by insufficient demand and excess supply, the regional readings are likely to reinforce the view that a recent pick-up in economic momentum will be difficult to sustain and further policy stimulus is needed.
"The backdrop remains one of sub-trend growth, inflation that is below target, difficulty in increasing revenue as margins are sacrificed to win modest volume gains, slow wage growth cramping spending and central banks that have used up much of their policy ammunition," said Alan Oster, chief economist at National Australia Bank.
That has been a factor in foot-dragging by the Federal Reserve over a follow-up to its December rate hike, leaving the markets in a sweat in case U.S. policymakers move in June.
---- So far, the massive ECB stimulus and weaker euro has yet to feed through to euro zone factories which operated only marginally faster in April.
Markit's Manufacturing Purchasing Managers Index (PMI) rose to 51.7 from March's 51.6, a marginal improvement from an earlier flash estimate of 51.5.
"The economy is growing but the pace is still very moderate. There's no reason to the ECB to change its policy stance," said Christoph Weil, economist at Commerzbank in Frankfurt.
Manufacturing growth was strong in Italy and, buoyed by rising demand at home and abroad, hit a three-month high in Germany. But in France activity contracted at the steepest rate in a year.
What will probably make particularly grim reading for ECB policymakers is the deep price cuts factories were again forced in to in order to drum up new business.
The survey's output price index was 47.4, higher than March's 47.1 but the second-lowest since early 2010.

In other news the Transatlantic Trade and Investment Partnership talks are not going well. TTIP, heavily opposed by organised Labour, US threats to German, French, and Italian auto manufacturers is only likely to stiffen resistance. At the weekend, someone leaked some of the negotiating documents to Greenpeace.

U.S. threatens to block easing of EU car exports in TTIP talks, media report

Mon May 2, 2016 6:04am EDT
The United States is threatening to prevent the easing of export controls on European cars in order to force Europe to buy more U.S. agricultural products, Germany's Sueddeutsche Zeitung newspaper and ARD public broadcaster reported on Sunday.
In talks on the Transatlantic Trade and Investment Partnership (TTIP), a sweeping U.S.-European free trade deal, the United States has also blocked a European call to replace private arbitration tribunals, responsible for corporative lawsuits, with a public state model, the reports said.
The media outlets said they obtained 240 pages of internal negotiations documents from the environment group Greenpeace. Several people familiar with the negotiations confirmed that the documents were current, the media said.
The documents suggest the United States is putting more pressure on the European Union in ongoing negotiations for a transatlantic free trade deal than previously thought, the media outlets said.
The top negotiators trying to reach agreement on the trade deal avoided agriculture, public procurement and other thorny issues in talks last week.
Instead, Assistant U.S. Trade Representative Daniel Mullaney and European Commission lead negotiator Ignacio Garcia Bercera said on Friday, they concentrated on less controversial areas such as small and medium enterprises and technical language.

"Those entrapped by the herd instinct are drowned in the deluges of history. But there are always the few who observe, reason, and take precautions, and thus escape the flood. For these few gold has been the asset of last resort."

Antony C. Sutton
At the Comex silver depositories Monday final figures were: Registered 27.98 Moz, Eligible 123.74 Moz, Total 151.72 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
When the next financial crisis hits, says the Fedster’s Big Dud, we need the power to bail-out more than just the usual suspect banksters. I guess that some in the Fed aren’t thinking of a bail-in of bond holders and depositors, any more. More to the point, after all the QE, ZIRP and NIRP, and all the central bankster cheerleading that the Great Recession is over and done with, what does the Fed’s Big Dud know that we don’t? Stay long fully paid up physical gold and silver held outside of the rickety financial system. Someone in main stream media needs to ask the panicky Federal Reserver, exactly what has got him so spooked.

Fed may need more powers to support securities firms during crises: Dudley

Sun May 1, 2016 8:12pm EDT
The U.S. Federal Reserve may need more powers to provide emergency funding to securities firms in times of extreme stress in order to deal with a liquidity crunch, New York Federal Reserve President William Dudley said on Sunday.
"Providing these firms with access to the discount window might be worth exploring," Dudley said in prepared remarks at a financial markets conference in Amelia Island, Florida organized by the Atlanta Fed.
The discount window is a credit facility through which banks borrow directly from the U.S. central bank in order to cope with liquidity shortages.
The Fed currently has limited ability to provide funding to securities firms in such situations, with the discount window only available to depository institutions.
But the transformation of securities firms since the financial crisis, Dudley said, with the major ones now part of bank holding companies and subject to capital and liquidity stress tests, meant the environment has now changed.
"To me, this is a more reasonable proposition now than it was prior to the crisis when the major dealers weren't subject to those safeguards," he said.
Dudley did not mention monetary policy or the U.S. economic outlook in his remarks.
Other "significant gaps" remain in the lender-of-last-resort function, Dudley added.
On this, he cited work being done on a global level by the Bank of International Settlements, known as the central banks' central bank, which is studying deficiencies with respect to systemically important firms that operate across countries.
Dudley called for greater attention in order to determine which country would be the lender-of-last-resort for such companies during another crisis.
"Expectations about who will be the lender-of-last-resort need to be well understood in both the homehttp://images.intellitxt.com/ast/adTypes/icon1.png and host countries," he said.

Brexit Quote of the week.

Dodgy Dave Cameron: leader of the nattering nabobs of Brexit negativism.

With apologies to Spiro Agnew

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?

Dubai's DEWA Gets 5 Bids to Expand Solar-Power Complex in Desert

May 1, 2016 — 1:27 PM BST
Dubai Electricity & Water Authority, the Persian Gulf emirate’s utility, said it received five bids to build 800 megawatts of solar-power generation capacity.
Developers are bidding to construct the third phase of a DEWA solar park in the sheikhdom’s desert, according to an e-mailed statement from the company. The lowest-cost bid would provide power for 2.99 cents a kilowatt-hour, it said.
Dubai is boosting solar generating capacity to diversify its energy mix and help meet growing demand for electricity. The emirate aims to get 7 percent of its power from clean energy sources by 2020. Dubai currently has 13 megawatts in operation at the solar park and a further 200 megawatts under construction.
DEWA will now review technical and commercial aspects of the bids, it said. Chief Executive Officer Saeed Mohammed Al Tayer said in March that the company planned to award construction contracts in May.

The monthly Coppock Indicators finished April

DJIA: 17773.64-19 Down. NASDAQ:  4775.36 +11 Down. SP500: 2065.30 -21 Down. 

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