Friday, 20 May 2016

G-7 Seconds Out, Round ????

Baltic Dry Index. 634 -08      Brent Crude 49.22

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

Brexit odds checker.

Brexit Quote of the Day.
“We hold these truths to be self evident: that all men are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, and the pursuit of happiness outside of the EUSSR.”

With grateful thanks to the writers of the US Declaration of Independence.

We open with the G-7 getting ready for next week’s acrimonious meeting in Japan. Despite what they say after their meetings, everyone does their own thing in the continuing currency and trade wars. Below, Uncle Scam gets ready to read the Riot Act to vassal Japan. Meanwhile China has just read the Riot Act to Uncle Scam.  Everyone is now talking at each other but no one seems to be listening. How long before “an unintended incident” occurs? Will it be a “black swan” for our global casinos?

“But I don’t want to go among mad people," Barry remarked.
"Oh, you can’t help that," said Abe: "we’re all mad here. I’m mad. You’re mad."
"How do you know I’m mad?" said Barry.
"You must be," said Abe, "or you wouldn’t have come here.”
With apologies to Lewis Carroll.

Japan and the U.S. are headed for a showdown over currency manipulation

Published: May 19, 2016 2:44 p.m. ET

Investors are on high alert for tension over dollar-yen exchange rate during [this?] weekend’s G-7 summit

Investors will be watching for signs of tension between Japanese and U.S. powers this weekend, when central bankers and finance chiefs face off in Sendai, a city northeast of Tokyo, for the latest Group of 7 summit.

The two countries have sparred over the dollar-yen exchange rate in the months since the Japanese currency began a prolonged rise against the dollar. The yen has lost nearly 9% of its value relative to the dollar since the beginning of the year.

Last week, Japanese Finance Minister Taro Aso spoke publicly about the continuing disagreement between U.S. and Japanese policy makers over whether the rise in the yen seen since the beginning of the year has been severe enough to warrant an intervention. Japan might favor a weaker currency primarily because it makes the country’s exports more attractive.

“We’ve have often been arguing over the phone,” Aso said, according to The Wall Street Journal.

He also reiterated that Japanese officials wouldn’t hesitate to intervene in the market if the currency continued its sharp moves. Plus, he said, the Treasury Department’s decision to put Japan on a currency manipulation monitoring list “won’t constrain” the country’s currency policy.

The Treasury published the list for the first time this year, including it as part of a semiannual report on currency practices released late last month. Japan was joined on the list by China, Germany, Taiwan and Korea.

To be included on the Treasury’s watch list, a country must meet at least two of three criteria: A trade surplus with the U.S. larger than $20 billion, a current-account surplus larger than 3% of its gross domestic product—or it must engage in persistent one-sided intervention in the currency market, which the Treasury qualifies as repeated purchases of foreign currency amounting to more than 2% of a country’s GDP over the course of a year.

G7 Releases Ise-Shima Progress Report Ahead of Japan Summit

On May 20, the G7 released the Ise-Shima Progress Report: G7 accountability on development and development-related commitments.

The report is released ahead of the G7 Summit 2016 Japan in Ise-Shima on May 26-27. This Report reviewed the progress on the implementation of 51 commitments made at the Summits between 2002 and 2015, covering the following 10 sectors: Aid and Aid Effectiveness, Economic Development, Health, Water and Sanitation, Food Security, Education, Equality, Governance, Peace and Security, and Environment and Energy.

click here to read the full Ise-Shima Progress Report.

Overview of Participating Countries

China says it's ready if US ‘stirs up any conflict’ in South China Sea

10 Hours Ago
BEIJING — China's attempts to claim a nearly 1.4-million-square-mile swathe of open ocean are without precedent and probably without legal merit, but Beijing continues to assert its right to the economically critical zone — and increasingly puts its claims in military terms.

Speaking to a small group of reporters in Beijing on Thursday, a high-ranking Chinese official made his warning clear: The United States should not provoke China in the South China Sea without expecting retaliation.

The Chinese people do not want to have war, so we will be opposed to [the] U.S. if it stirs up any conflict; said Liu Zhenmin, vice minister of the Ministry of Foreign Affairs;Of course, if the Korean War or Vietnam War are replayed, then we will have to defend ourselves.

The so-called nine-dash line" that China has drawn over most of the South China Sea — a gargantuan territorial claim that stretches about 1,200 miles from its shores — would give Beijing control over a zone that's estimated to handle about half of global merchant shipping, a third of the planet's oil shipping, two-thirds of global liquid natural gas shipments, and more than a 10th of Earth's fish catch.


 China demands end to U.S. surveillance after aircraft intercept

Thu May 19, 2016 9:13pm EDT
Beijing demanded an end to U.S. surveillance near China on Thursday after two of its fighter jets carried out what the Pentagon said was an "unsafe" intercept of a U.S. military reconnaissance aircraft over the South China Sea.

The incident, likely to increase tension in and around the contested waterway, took place in international airspace on Tuesday as the plane carried out "a routine U.S. patrol," a Pentagon statement said.

A U.S. Defense official said two Chinese J-11 fighter jets flew within 50 feet (15 meters) of the U.S. EP-3 aircraft. The official said the incident took place east of Hainan island.

"Initial reports characterized the incident as unsafe," the Pentagon statement said.

"It must be pointed out that U.S. military planes frequently carry out reconnaissance in Chinese coastal waters, seriously endangering Chinese maritime security," China's Foreign Ministry spokesman Hong Lei Hong told reporters.

"We demand that the United States immediately cease this type of close reconnaissance activity to avoid having this sort of incident happening again," Hong said.

Speaking at a regular press briefing, he described the Pentagon statement as "not true" and said the actions of the Chinese aircraft were "completely in keeping with safety and professional standards."

"They maintained safe behavior and did not engage in any dangerous action," Hong said.

The encounter comes a week after China scrambled fighter jets as a U.S. Navy ship sailed close to a disputed reef in the South China Sea.

In the casinos, there was fear again that the Fedster’s might take away the punchbowl next month. Then again, they might not. Uncertainty is generally a killer of financial planning. But a 45 year bond market bull bubble is coming to an end. 

S&P 500 closes in negative territory for 2016

U.S. stocks recovered some of the early losses but ended lower Thursday on mounting fears that the Federal Reserve’s next interest-rate hike could come as early as June.

The S&P 500 SPX, -0.37% fell 7.59 points, or 0.4%, to 2,040.04 and turned negative for the year. The drop was led by a 1% loss in industrials, and a 0.9% decline in financials, with six of the S&P 500’s 10 sectors in negative territory.

The Dow industrials DJIA, -0.52% fell 91.22 points, or 0.5%, to 17,435.40. At session lows, the blue-chip index was down 197 points, briefly turning negative for the year. Goldman Sachs Group Inc. GS, -3.28% and Boeing Co. BA, -2.22% down 3.3% and 2.2% respectively, led losses. The Dow closed 4.8% below its all-time closing high of 18,312.39 set on May 19, 2015
Meanwhile, the Nasdaq Composite COMP, -0.56% slipped 26.59 points, or 0.6%, to 4,712.53
We end for the day with the Greek crisis crawling back into the news again. With the Balkans now closed to Mad Merkel’s Migrants, someone, anyone, better give the Greeks some more cash fast, they’ve now got masses of migrant prisoners to feed, clothe, house and educate. The EUSSR at its best in self-destruction mode. Brexit now! Just imagine what happens when the EUSSR has to try to rescue France, Spain and Italy!
"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 Prime Minister of Italy.

IMF says it won't participate in Greek bailout without further reform

Published: May 19, 2016 10:57 a.m. ET
The International Monetary Fund said Thursday it wouldn't rejoin the Greek bailout program unless the country enacts certain controversial economic reforms, including an overhaul of its pension program. The comments contradict the current European bailout proposals for Greece, which included the fund as a lender. 
The announcement is the latest step in a simmering disagreement between the IMF and Germany over the terms of the Greek bailout. The IMF is calling for more extreme measures than European lenders say they can tolerate, including a fixed low interest rate for Greek debt and delayed repayments for bailout loans. A compromise is needed by June to stave off a Greek default. The euro EURUSD, -0.0981% and European stocks SXXP, -0.78% were little-changed after the announcement.

Now or later? Euro zone, IMF at odds over when Greece should get debt relief

Thu May 19, 2016 6:50am EDT
The euro zone and International Monetary are struggling with Greece's debt crisis - not with Athens this time, but with each other over when to give Greece a break on its future massive debt repayments.

The euro zone has begun talks on debt relief for Greece but wants to postpone the final decision until 2018; the IMF insists Greek debt repayment is unsustainable and investors need clarity now.

Euro zone finance ministers are likely to forge a tentative plan when they meet next Tuesday - what in Brussels-speak is known as a political agreement. But their offer is unlikely to be anything but highly conditional, euro zone officials preparing the talks said.

The gist is to find a way to lower Greece's debt-repayment burden without actually cutting the debt itself via a so-called haircut. Instead, Greece's debt would be "re-profiled" - less interest, longer maturities, limits based on growth etc.

On May 9, the ministers asked their deputies to explore such specific measures which could be offered to Greece "if necessary" at the end of the bailout in 2018 if Greece implements all the agreed reforms.

The caveat "if necessary" has appeared in all euro zone statements on Greek debt relief since November 2012, mainly on the insistence of countries led by Germany, which do not believe it is needed at all.

The IMF has no such qualms. "To restore debt sustainability ... decisive action by our European partners to grant further official debt relief will be essential," it has said.

The euro zone, however, has its competing members' views to deal with, which they will attempt to satisfy next week. Even with the "if necessary" phrase still in, officials say Greece and its euro zone lenders could both call it a victory.

"Greece can go home and say that the Eurogroup has decided 'in principle' to grant debt relief after 2018," one official said, while Berlin's hardline finance minister Wolfgang Schaeuble can tell Germans that what will matter is the state of Athens' finances only in 2018 and beyond.

In a time of universal deceit, telling the truth is a revolutionary act.

George Orwell.

At the Comex silver depositories Thursday final figures were: Registered 29.67 Moz, Eligible 123.86 Moz, Total 153.53 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Yesterday on China we wrote: "In China news, Q1 16s one trillion credit/debt expansion seems to have been a one off boost to the economy. At least according to an unnamed authority speaking through the People’s Daily.” Today, more on that subject by one of GB’s finest economic journalists, able to do the subject far more justice than my poor amateur ramblings. Over to Mr. Ambrose Evans-Pritchard at the Telegraph. His whole article is well worth the read, and suggests that after a few more weeks of phony stability, the you know what, is going to hit the you know what, in China.

China's Communist Party goes way of Qing Dynasty as debt hits limit

Ambrose Evans-Pritchard18 May 2016 • 8:55pm
Nobody rings a bell at the top of the credit supercycle, to misuse an old adage. Except that this time somebody very powerful in China has done exactly that. 
China watchers are still struggling to identify the author of an electrifying article in the People's Daily that declares war on debt and the "fantasy" of perpetual stimulus. 
Written in a imperial tone, it commands China to break its addiction to credit and take its punishment before matters spiral out of control. If that means bankruptcies must run their course, so be it. 
Fifteen years ago such a mystery article would have been an arcane matter, of interest only to Sinologists. Today it is neuralgic for the entire global - and over-globalized - financial system. 
China's debt is approaching $30 trillion. The fresh credit alone created since 2007 is greater than the outstanding liabilities of the US, Japanese, German, and Indian commercial banking systems combined. 
Moody's warned this month that China's state-owned entities (SOEs) have alone racked up debts of 115pc of GDP, and a fifth may require restructuring. The defaults are already spreading up the ladder from local SOE's to the bigger state behemoths, once thought - wrongly - to have a sovereign guarantee.
To put matters in context, leverage rose by roughly 50 percentage points of GDP in Japan before the Nikkei bubble burst in 1990, or in Korea before the East Asia crisis in 1998, or in the US before the subprime debacle. This gauge is an almost  mechanical indicator of a future credit crisis. 
As we all know, China is in a class of its own. Debt has risen by 120 to 140 percentage points. The scale of excess industrial capacity - and China's power and life and death over commodity markets -  mean that any serious policy pivot by the Communist Party would set off an international earthquake. 
Hence the fevered speculation about this strange article published on May 9 in the house journal of the Politburo. It was no ordinary screed.
The 11,000 character text - citing an "authoritative person" - was given star-billing on the front page. It described leverage as the "original sin" from which all other risks emanate, with debt “growing like a tree in the air”.
It warned of a "systemic financial crisis"  and demanded a halt to the "old methods" of reflexive stimulus every time growth falters. "It is neither possible nor necessary to force economic growing by levering up," it said.
It called for root-and-branch reform of the SOE's - the redoubts of vested interests and the patronage machines of party bosses - with an assault on "zombie companies".  Local governments were ordered to abandon their illusions and accept the inevitable slide in tax revenues, and the equally inevitable rise in unemployment.
If China does not bite the bullet now, the costs will be "much higher" in the future. "China’s economic performance will not be U-shaped and definitely not V-shaped. It will be L-shaped," said the text.  We have been warned.
Jonathan Fenby, a China veteran at Trusted Sources, says you can interpret the piece in two very different ways: either as a "call to arms" after three years of foot-dragging on the Third Plenum reforms, or the "last gasp for reformers who see their agenda slipping away." 
"We see the current state of affairs as very much resembling the old imperial court, where various factions fight for attention of the undisputed leader – namely, Xi," he said. 
---- Most think the author was either President Xi Jinping himself, or his right-hand man Liu He - who handles daily operations for the 'Leading Group', China's version of the White House National Economic Council. 

Brexit The Animated Movie.

Brexit Quote of the week.
BBC "the propaganda arm of the EU."
Martin Durkin. Brexit Filmmaker.

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?

Milestone by milestone, the way we generate and store electricity is changing.

Portugal runs for four days straight on renewable energy alone

Zero emission milestone reached as country is powered by just wind, solar and hydro-generated electricity for 107 hours
Wednesday 18 May 2016

Portugal kept its lights on with renewable energy alone for four consecutive days last week in a clean energy milestone revealed by data analysis of national energy network figures.

Electricity consumption in the country was fully covered by solar, wind and hydro power in an extraordinary 107-hour run that lasted from 6.45am on Saturday 7 May until 5.45pm the following Wednesday, the analysis says.

News of the zero emissions landmark comes just days after Germany announced that clean energy had powered almost all its electricity needs on Sunday 15 May, with power prices turning negative at several times in the day – effectively paying consumers to use it.

Oliver Joy, a spokesman for the Wind Europe trade association said: “We are seeing trends like this spread across Europe - last year with Denmark and now in Portugal. The Iberian peninsula is a great resource for renewables and wind energy, not just for the region but for the whole of Europe.”

James Watson, the CEO of SolarPower Europe said: “This is a significant achievement for a European country, but what seems extraordinary today will be commonplace in Europe in just a few years. The energy transition process is gathering momentum and records such as this will continue to be set and broken across Europe.”

As recently as 2013, Portugal generated half its electricity from combustible fuels, with 27% coming from nuclear, 13% from hydro, 7.5% from wind and 3% from solar, according to Eurostat figures.

By last year the figure had flipped, with wind providing 22% of electricity and all renewable sources together providing 48%, according to the Portuguese renewable energy association.

While Portugal’s clean energy surge has been spurred by the EU’s renewable targets for 2020, support schemes for new wind capacity were reduced in 2012.

Despite this, Portugal added 550MW of wind capacity between 2013 and 2016, and industry groups now have their sights firmly set on the green energy’s export potential, within Europe and without.

 “An increased build-out of interconnectors, a reformed electricity market and political will are all essential,” Joy said. “But with the right policies in place, wind could meet a quarter of Europe’s power needs in the next 15 years.”

In 2015, wind power alone met 42% of electricity demand in Denmark, 20% in Spain, 13% in Germany and 11% in the UK.

Another weekend, and late Spring in the Thames Valley is fast changing into Summer. Change seems to be underway too in our central bankster and China driven casinos. Everyone now seems to be leery of stocks and has taken a shine to gold. On the Brexit front, Project Fear went from threatening the start of World War Three this week, to promising a collapse in GB house prices and generating GB youth unemployment at the nose bleed levels of Italy and Greece. It is expected that the upcoming G-7 summit will order GB voters to vote to remain in the EUSSR.

The trouble is, no one seems to be listening anymore. America’s not listening to China, which isn’t listening to America. Japan’s not listening to anyone as it steps up its game of suicidal Russian roulette. In the EUSSR, the elite aren’t listening to their increasingly right wing voters. Turkey’s Erdogan isn’t listening to anything except the sound of his own voice. What could possibly go wrong? Have a great weekend everyone.

"When it becomes serious, you have to lie"

Jean-Claude Juncker. Failed Luxembourg Prime Minister and ex-president of the Euro Group of Finance Ministers. Confessed liar. EC President.

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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