Monday, 13 June 2016

B-Day Minus 10. Did Oil Just Peak?

Baltic Dry Index. 611 +01       Brent Crude 49.94

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

Brexit odds checker.

Brexit Quote of the Day.
“Dodgy Dave Cameron: The kind of politician who would cut down a redwood tree and then mount the stump to make a speech for conservation.”

With apologies to Adlai Stevenson

Despite the Remainiacs’s Project Fear Brexit campaign attacking pensioners, those in the military and those on benefits, at the weekend,  saying all will be worse off if GB exits the wealth and jobs destroying EUSSR, little seems to work as intended any more, in Dodgy Dave’s Remainiac surrender campaign. The world is starting to notice that Great Britain might actually go off the reservation and vote to leave the dying Bilderberger United States of Europe asylum, next week. Desperate times call for desperate measures and Dodgy Dave’s Remainiacs have asked Russia for advice on stuffing ballot boxes.
Below, this morning’s bad news from Asia, where Abenomics is getting blown out of the water as everyone devalues against the yen. In the Asian version of Squidland, the aftermath of last year’s collapse in China’s casinos is now devastating betting volumes in all of the regions casinos. Can another stock market crash be very far away?

Asia Stocks Tumble as Brexit Concerns Spur Move to Safety Assets

June 13, 2016 — 1:15 AM BST Updated on June 13, 2016 — 4:23 AM BST
Stocks sank from Japan to Hong Kong, with Asia’s benchmark index poised for its biggest decline since April, as uncertainty ahead of central bank meetings and a vote on the U.K. leaving the European Union sent investors seeking safety.

The MSCI Asia Pacific Index fell 1.7 percent to 127.91 as of 12:06 p.m. in Tokyo. Optimism that borrowing costs will remain lower for longer amid tepid global economic growth is waning as investors grow cautious ahead of a string events in the next two weeks. The looming meetings of the Federal Reserve and Bank of Japan later this week, followed by next week’s vote on Britain’s membership in the European Union, have the potential to roil markets.

“The risk-off stance will continue this week ahead of a multitude of events,” Bernard Aw, a strategist at IG Asia Pte in Singapore, said by phone. “The Fed and BOJ meetings as well as the Brexit vote next week will set the tone for financial markets. With the World Bank recently flagging a slower global growth outlook for 2016, investors are also on the lookout for monetary support and fiscal stimulus from major economies.”

Japan’s Topix index tumbled 2.7 percent as the yen strengthened for a second day. The gauge is heading for the lowest closing level in two months. A gauge of volatility on the Nikkei 225 Stock Average jumped the most in more than a month. Short-selling of shares on the Tokyo Stock Exchange surged to 47.1 percent on Friday, the highest in records going back to 2008, according to exchange data compiled by Bloomberg.

South Korea’s Kospi index dropped 1.6 percent. New Zealand’s S&P/NZX 50 Index slipped 0.7 percent. Australia is closed for a holiday. Hong Kong’s Hang Seng Index sank 2.5 percent. Singapore’s Straits Times Index slipped 1.5 percent.

Markets in China and Taiwan opened lower after last week’s holiday. The Shanghai Composite Index slipped 0.6 percent, while the Hang Seng China Enterprises Index of mainland stocks traded in Hong Kong slumped 2.4 percent, heading for a two-week low. Taiwan’s Taiex index declined 1.9 percent.

Trading Floors Go Quiet Across Asia as Equity Desks Face the Ax

June 12, 2016 — 10:00 PM BST
Even by the boom-bust standards of Asia’s equity business, it’s been a turbulent 12 months.

At this time last year, the industry was riding high as China’s stock market soared, volumes jumped to records and some of the biggest names in finance boosted hiring. Now, turnover is shrinking at the fastest pace since at least 2006 and banks are under growing pressure to either downsize their Asian equity desks, or exit parts of the business altogether.

Investors and issuers are retrenching after Chinese shares crashed, the Federal Reserve tightened monetary policy and divisive political debates from the U.S. to Britain weighed on sentiment. Revenue from trading stocks in China and Hong Kong could fall 30 percent to 50 percent in the first half from a year earlier, according to senior executives at four firms who spoke on condition of anonymity. Equity derivatives sales in Asia are on track to drop at least 50 percent, while prime brokerage is down roughly 20 percent, two of the executives said.

"Because overall revenue is down, further cuts are likely across the industry,” said Taichi Takahashi, Asia-Pacific head of equities at UBS Group AG in Hong Kong. “Some second-tier players will throw in the towel because their market share is shrinking."

Asian equities units could be facing their worst year since 2012, when the European credit crisis roiled markets, according to two of the executives interviewed for this story, who asked not to be identified because global banks don’t break out results for regional equities operations.

Revenue for the industry in Asia slumped 32 percent to $2.6 billion in the first quarter from a year earlier, compared with a 20 percent drop worldwide, according to estimates from Coalition, a banking research firm. Regional equities headcount dropped by about 300, or 6 percent, Coalition figures show.

Turnover on Asia’s 10 biggest exchanges has declined 69 percent from last year’s peak in May, the deepest slump over any period of the same length since Bloomberg began tracking the data in 2006. Equity capital markets deals have also slowed, with Asia playing host to just two billion-dollar initial public offerings this year.

Investment banks geared to Asian stocks, including UBS, Societe Generale SA and Credit Suisse Group AG, will probably underperform, JPMorgan Chase & Co. analysts led by Kian Abouhossein wrote in a May 19 research note.

It’s hard to blame traders for pulling back. China’s economy shows few signs of recovering from the weakest annual expansion since 1990, while analysts predict the Fed will boost borrowing costs again this year after lifting rates in December. Britain’s June 23 referendum may lead to the country’s exit from the European Union, just months before a U.S. presidential election that could put former reality-TV star Donald Trump in the White House.
We end with a warning from the oil patch, where the recent rise in the crude oil price has American frackers completing previously drilled oil wells again. As Canada’s tar sands increasingly come back on-stream, and Iran gears up to start modernising its oil sector, did the crude oil rally just peak last week?

Why the Oil Price Rally Might Falter

By Julian Lee June 12, 2016 8:00 AM GST
Last year's oil price rally ran out of steam in early May after 112 days. This year's has already lasted longer (140 days so far) and prices have risen further, but there are worries that, it, too, may be running ahead of market fundamentals. While prices seem unlikely to collapse again, there are good reasons to expect a pause in their upward march.

Crude prices have nearly doubled from the lows reached in mid-January. Brent rose above $50 a barrel last Monday and stayed there all week. West Texas Intermediate crude narrowly failed to do the same after breaking through the psychological barrier on Tuesday. Brent prices have risen an average 18 cents a day since mid-January, remarkably similar to the 19 cents a day early last year.

Sure, there's a real risk of structural supply shortages down the road, as oil companies have slashed spending on new projects, but they're not here yet. What we do have is a number of unforeseen disruptions, most recently in Canada and Nigeria, with a further deterioration in Libya, which have helped eliminate the surplus.

----The biggest new disruption is already being resolved: the wildfire that swept through Alberta's oil sands and cut daily production by about 1.2 million barrels. Canadian production is returning slowly and will continue to add supply.

And while even the cheeriest optimist would hesitate to call an end to U.S. output declines, production there has just risen for the first time in three months on a week-by-week basis. Continental Resources has started fracking wells that it had drilled, but left uncompleted as prices collapsed. There were 4,290 such wells in the U.S. at the end of 2015 and others may follow Continental's lead, although Bloomberg Intelligence's Peter Pulikkan believes crude may need to rise another $5-$10 per barrel before that happens.

----Yet despite the outages, the EIA still sees global inventories building through August. The resumption of Canadian supply, or any lasting evidence that U.S. output has stopped falling, could quickly tip bullish sentiment bearish again. Doubly so if there's any improvement in Nigeria or Libya. Crude's upward trajectory is still a fragile thing.

“The problem with fiat money is that it rewards the minority that can handle money, but fools the generation that has worked and saved money.”

“Adam Smith” aka George Goodman.

At the Comex silver depositories Friday final figures were: Registered 22.48 Moz, Eligible 128.32 Moz, Total 150.80 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Back in the wild west 90s, “capitalism’s broken,” wailed fallen former guru Greenspan, the man that up until then was mostly responsible for breaking it. Now, the central banksters, casino banksters and Great Vampire Squids, have totally lost the plot in currencies and derivatives. Nothing is working as modern monetary theory says it should, and no one seems to know why. To me it’s just another unintended consequence of the Great Nixonian Error (GNE) of fiat money, communist money, casino money, adopted all the way back on August 15, 1971, when Bretton Woods 1.0 went bust for the first time. On communist money, communism went bust. Why should we in the west be any different on communist money?
Capitalism without financial failure is not capitalism at all, but a kind of socialism for the rich.
James Grant, Grant's Interest Rate Observer

A Breakdown in Old Rules Leads to a Rethink on How Global Markets Work

June 9, 2016 — 7:46 PM BST Updated on June 9, 2016 — 8:00 PM BST
A standard textbook relationship that every student of economics learns in school has been flipped on its head, and it’s leading to a major rethink on the connection between bank balance sheets, exchange rates, global asset prices, and monetary policy.

The prices of derivatives used for hedging currency risk are violating no-arbitrage rules, a development that points to a significant decline in global banks’ ability to intermediate capital flows from global investors, in part because of new regulations that have been introduced in recent years.

That decline in intermediation capacity appears to have heightened the sensitivity of exchange rates and global asset prices to monetary policy since the crisis, and helps explain some of the unusual gyrations witnessed recently in markets — like extreme moves in the so-called cross-currency basis, which according to traditional theory should be non-existent, and mostly was before the crisis that began in 2007.

"Financial markets, for their part, appear to be tethered more closely than ever to global events, and the real economy appears to dance to the tune of global financial developments, rather than the other way round," Hyun Song Shin, head of research at the Bank for International Settlements, said Wednesday in a speech on the topic during a gathering at the World Bank in Washington.

Shin cited recent research from New York University economist Xavier Gabaix and Harvard economist Matteo Maggiori, who developed a theory of exchange-rate determination based on capital flows in the presence of constraints on bank balance sheets.
"Since financiers require compensation for holding currency risk in the form of expected currency appreciation, exchange rates are jointly determined by capital flows and by the financiers’ risk bearing capacity," Gabaix and Maggiori say. "Financiers both act as shock absorbers, by using their risk bearing capacity to accommodate flows that result from fundamental shocks, and are themselves the source of financial shocks that distort exchange rates."
This is not at all the traditional understanding of what determines exchange rates, which has largely to do with macroeconomic fundamentals. The theory, however fits well with what we see in the foreign-exchange derivatives market, where a long-standing relationship known as covered interest parity, or CIP — which states that the interest rate implied by the forward exchange rate in a currency swap should match the short-term interest rate in the home country of the currency that is borrowed in the swap — has completely broken down.
The Great Nixonian Error of fiat money, communist money, first went bust in the stock market crash of October 19, 1987. Fallen guru Greenspan and his cronies then rigged the market opening the next day, and over the next few days and weeks, the Muppets trooped back into the casinos secure in belief that the Fed had given them all a “put.”  The market next went bust, in the great bond market massacre of early 1994, when fallen former guru Greenspan misjudged the bond market and raised interest rates, oblivious to the fact that everyone was now trading the Fed. Another Fedster market rig was the result, with the Muppets became even more convinced that a Fed Put was in place.
But that “fix” only lasted until Long Term Capital Management blew up in the casino in 1998, losing $4.6 billion in four months by September, and threating  to crash many of the other Muppets gambling in the casino. Another hurried “too big to fail” Fedster market rig bailout was put in place. By now former guru Greenspan was gun shy of crashes, so he set out on a policy of encouraging market bubbles. And that’s been central bankster policy ever since. But by the time Bear Stearns crashed in March 2008 the casino was now so crooked and reliant on the Fedster’s, that the whole daisy chain of derivatives came crashing down in September 2008, when Lehman Brothers failed, blowing up Joe Cassano, and giant insurer AIG’s Credit Default Swaps book to the tune of $30 billion.
The rest as they say is history. Governments stepped in using taxpayer cash and newly invented money at the central banks to take over all the failed gambling bets, and started trying to rig markets higher again. So here we are today. Main Street snake bit and stumbling around in circles gradually going bust.  The one percenter’s in heaven, with the central bankster’s covering their backs and any gambling losses, and the whole Great Nixonian Error getting set to blow again. While 2008-2009 was an Atom bomb in the gambling casinos, 2016-2017 will be a Hydrogen bomb, if not a cobalt Hydrogen bomb in its effects.
"We finished the year, and we reported that we had $17 billion of cash sitting at the bank's parent company as a liquidity cushion. As the year has gone on, that liquidity cushion has been virtually unchanged."
Alan Schwartz, CEO Bear Stearns, March 12, 2008. Bust March 16, 2008.
Brexit The Animated Movie.

Brexit Quote of the week.

We hold these truths to be self evident: that all men are created equal; that 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.

Solar  & Related Update.

With events happening fast in the development of solar power and graphene, I’ve added this 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?

Towards building next-generation batteries using a pigment electrode

Electrode design of next-generation batteries using Prussian blue and its analogues

Date: June 7, 2016

Source: Toyohashi University of Technology

Summary: Researchers have demonstrated calcium ion batteries (CIBs) using pigment electrodes such as Prussian blue and its analogues. The CIBs showed excellent cyclability of discharge and charge in a calcium-based organic electrolyte. This is thought to derive from strong atomic bonds in Prussian blue structures, which possess movable pathways for large-sized ions in three dimensions. Such unique structures have excellent potential for application in newly designed batteries.
Calcium ion batteries (CIBs) have attracted much attention as next-generation batteries to replace lithium ion batteries (LIBs) because the theoretical capacity of CIBs is twice that of LIBs. This doubled capacity can be explained by the difference between monovalent and divalent ions. In addition, CIBs possess advantages such as a lower cost and higher safety because calcium is more abundant than lithium and because CIBs have a higher melting point than LIBs. However, there is one major obstacle to the application in CIBs. 
There is no suitable electrode material in which calcium ions can be inserted and extracted reversibly because of the relatively large ionic radius of calcium ions (112 pm) as compared to that of lithium ions (76 pm).
In this study, Tomohiro Tojo and his colleagues at the Department of Electrical and Electronic Information Engineering, Toyohashi University of Technology, employed Prussian blue (PB) and Prussian blue analogues (PBAs) as CIB electrodes because they possess large sites for inserting and extracting large-sized ions, as shown in Fig. 1. Up to now, using PBAs as an electrode material, the electrochemical behaviors of sodium ions corresponding to the radius of calcium ions have been examined in organic and inorganic electrolytes. 
These reports have shown reversible insertion and extraction of sodium ions into and from PBA structures.
The research team investigated the electrochemical performance of several PBA electrodes in order to determine whether calcium ions in an organic electrolyte exhibit either reversible or irreversible insertion and extraction into and from the crystal structure. We found reversible capacities of 40-50 mAh/g at a low current density, as shown in Fig. 2(a). In Fig. 2(b), the Coulombic efficiencies, which are defined as the ratio of the amount of insertion (discharge) and extraction (charge) of calcium ions, were observed to have a constant value of 90% after the 3rd cycle.
The results shown in Fig. 2 demonstrate the excellent cyclability of the PBA electrodes, even though the reversible capacities were half the theoretical capacity. The researchers investigated the reason for the high reversibility using X-ray diffraction (XRD) and X-ray photoelectron spectroscopy (XPS). The reversibility is explained by the durable structure of the PBAs and their excellent charge balance during the insertion and extraction of calcium ions.
We propose Prussian blue (PB) and Prussian blue analogues (PBAs) as feasible electrode materials for CIBs, even though additional investigation is needed in order to enhance the reversible capacities still further. The researchers have carried out the further study to utilize CIBs beyond LIBs.

The monthly Coppock Indicators finished May

DJIA: 17787  -20 Up NASDAQ:  4946 +04 Down. SP500: 2097 -18 Up.

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