Thursday, 9 June 2016

EU – “Existential Crisis.”

Baltic Dry Index. 610 +04       Brent Crude 51.52

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

Brexit odds checker.

Brexit Quote of the Day.
Aw, you can come up with statistics to prove anything, Dave. Forty percent of all British people know that.
With apologies to Homer Simpson.

We have arrived at B-Day, when the Bilderberger elite gather to meet in secret in Dresden, to plot the result of the UK referendum, the outcome of the US presidential election, the fate of the major global stock markets for the rest of the year, and whether to allow the IMF to endorse the Chinese Yuan later in the autumn. They probably have a few more things to fix too like the EUSSR existential crisis, for more on that scroll down to the bottom of this section; the outcome of the Spanish election, and whether to allow a US recession before or after the US elections. That largely depends on who they want to install in the White House.
As a result, Asian markets are very wary today.  US stock markets are poised to make new all-time highs, but on weakening earnings, record corporate debt, and a slowing US economy that’s flirting with recession. If the Bilderberger elite opt to allow it before the US elections, it’s lookout below for stocks.

Asian markets wary, with all eyes on U.S., U.K.

Published: June 8, 2016 11:11 p.m. ET

U.S. recovery, Brexit loom large; bank stocks drag Nikkei

Asian markets were mixed on Thursday amid continuing uncertainty over the pace of the U.S. economic recovery and ahead of looming major political events, such as a British referendum over whether or not to remain in the European Union.

Japan’s Nikkei Stock Average NIK, -1.40%   was down 0.7%, while Australia’s ASX 200 XJO, -0.55%  was 0.1% lower. Elsewhere, South Korea’s Kospi SEU, -0.18%  was up 0.2% and New Zealand’s NZX50 NZ50GR, -0.15%  was 0.04% higher.

Concerns about the U.S. economy have grown quickly since the release on Friday of dismal U.S. jobs growth figures for May. While the initial negative markets reaction has run its course, uncertainty remains over the significance of the data for the economy.

Many market participants are also starting to refrain from aggressive betting ahead of significant political events in coming weeks, including the U.K. referendum later this month and Japan’s upper house election in July.

“You’d need to see the main framework before betting. In fact, I suspect trading will be directionless like this until the U.S. presidential election,” said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management Co.

Policy makers at various corners of the globe are under pressure to take steps to support their economies.
The dollar rose to 1,156.5 Korean won from 1,152.5 following a surprise interest-rate cut by the Bank of Korea on Thursday. In its first rate cut in a year, South Korea’s central bank lowered its main policy rate by a quarter of a percentage point to 1.25%, a fresh record low.
In the Great America v China economic powwow just over in China, very little seems to have been accomplished, outside of China attempting to give the Yuan an increasingly larger role in global trade. I expect China’s trade patterns will increasingly become a political football in the coming US presidential election.

Frustrated in China, U.S. industry hopes for post-election reset to annual talks

Wed Jun 8, 2016 6:10am EDT
As the United States and China wrapped up talks this week touting bilateral cooperation on strategic and economic issues, many in the U.S. business community say the annual dialogue is delivering diminishing returns in resolving commercial disputes.

Foreign business in China is growing increasingly pessimistic, in part due to the country's slowing economy, but also because of growing fears of protectionism and rules that companies think could make it harder to operate there.

Concerns include draft regulations for China's insurance and banking industries and a pending cyber-security law that business groups say could limit sales for foreign companies in favor of domestic competitors.
Beijing's Made in China 2025 plan also calls for a progressive increase in domestic components in sectors such as advanced information technology and robotics, and President Xi Jinping has pledged to increase government support for technology companies, raising concerns that foreign providers will be at a disadvantage.

Those plans and proposals sit uneasily with China's "commitments to not impose nationality-based conditions on the sale, purchase or use (of info-technology)", a pledge repeated during the U.S.-China Strategic and Economic Dialogue (S&ED), which on Tuesday wrapped up its eighth and final round under President Barack Obama.

Chinese Foreign Ministry spokesman Hong Lei said on Wednesday that China would "earnestly put into effect" the many important consensus reached during the talks, but many in the U.S. business community feel the talks provide a forum to repeat previously made promises rather than push progress on market-opening reforms.

"Increasingly, there's been a sense that commitments have been made, and not necessarily adhered to. There's a sense that a growing set of bilateral challenges is outpacing the ability of the dialogue to effectively manage those areas of difference," said Jeremie Waterman, executive director for Greater China at the U.S. Chamber of Commerce.

China Gives First Investment Quota to U.S. to Boost Yuan Use

June 7, 2016 — 7:07 AM BST Updated on June 7, 2016 — 9:32 AM BST
China will give a 250 billion yuan ($38 billion) investment quota to the U.S., the largest after Hong Kong, as the Asian nation increases efforts to broaden use of the yuan overseas and lure capital back to the mainland.
The Chinese currency quota will be allocated under the Renminbi Qualified Foreign Institutional Investor scheme, the People’s Bank of China Deputy Governor Yi Gang said at a Tuesday briefing in Beijing on the sidelines of the two-day U.S.-China Strategic and Economic Dialogue. This is the first time China has given the quota to the U.S., which allows overseas institutions to use the yuan raised offshore to invest in onshore capital markets. China also selected an American bank to clear yuan transactions outside of the mainland.
Chinese authorities have been intensifying efforts to liberalize its capital markets before a decision by MSCI Inc. this month on whether to allow the nation’s yuan-denominated shares into its global indexes. Measures include relaxing controls over foreign investors’ access to its domestic markets and scrapping quota controls over the interbank bond market. With an estimated $1 trillion in capital flowing out of the nation in the past year, the government is seeking to stabilize the yuan before it joins the International Monetary Fund’s reserve basket of currencies this fall.
“We think that in the whole process of RMB internationalization, market demand plays a dominant role,” Yi said, referring to the currency’s official name. “If we can choose RMB and use RMB for investment it will be more effective and at the same time reduce financing costs for Chinese enterprises and relevant enterprises.”
U.S. President Barack Obama and his Chinese counterpart Xi Jinping agreed in Washington last year to further strengthen financial cooperation between the two nations. A string of yuan trading hubs outside the mainland has been established, while U.S. finance and industry leaders have set up a group aimed at allowing banks to make or receive yuan payments.
“Building on President Xi’s visit to Washington last fall, both sides agreed on a policy framework for the private sector to enhance RMB trading and clearing capacity in the United States,” U.S. Treasury Secretary Jacob J. Lew said in Beijing on Tuesday. “This will support the competitiveness of the U.S. financial and corporate sectors and improve U.S. investors’ access to China’s onshore capital markets.”
Getting U.S. investors on board may not be an easy task. China’s currency, bonds and equities all fell for a second straight month in May -- the first time that’s happened since at least 2006, according to data compiled by Bloomberg. The benchmark Shanghai Composite Index has tumbled 42 percent over the past year amid concern slowing economic growth will hurt profits.
In EUSSR news, NIRP is getting increasingly bizarre. Whatever the outcome of Brexit, the unreformable wealth and jobs destroying EUSSR, is now in danger of its own breakup.

Exclusive: Commerzbank considers hoarding billions to avoid ECB charges - sources

Wed Jun 8, 2016 10:41am EDT
Commerzbank, one of Germany's biggest lenders, is examining the possibility of hoarding billions of euros in vaults rather than paying a penalty charge for parking it with the European Central Bank, according to sources familiar with the matter.

Such a move by a bank part-owned by the German government would represent one of the most substantial protests yet against the ECB's ultra-low rates, which have been criticised by politicians including Finance Minister Wolfgang Schaeuble.

Although no decision has yet been taken, the lender has held discussions on the matter with German authorities, said two officials, who asked not to be named because of the sensitivity of the matter.

A spokesman for Commerzbank said it was not storing cash "at the moment" and declined to comment on whether it might do so in the future.

The ECB declined to comment.

Commerzbank's examination of storage alternatives to the ECB comes at a time of growing frustration among European lenders with the ECB charge on deposits.

Were it to store cash on a significant scale, it would become the first major European bank to take such a step. If other lenders were to follow suit, it could render the ECB penalty charge policy increasingly ineffective.

The ECB imposes a so-called negative rate equivalent to 4 euros annually on each 1,000 euros ($1,137) lenders deposit with the central bank. This is designed to encourage banks to lend money, rather than park it.

But some banks complain that a dim global economic outlook means there is weak demand for loans on the terms they require, and they have little option but to hoard cash.

EU FALLING APART: Now HOLLAND wants its own referendum to follow historic Brexit vote

NINE out of 10 Dutch people hope the Netherlands will hold its own EU referendum amid mass discontent at Brussels bureaucrats.

By PUBLISHED: 13:04, Wed, Jun 8, 2016
A whopping 88 per cent of people polled by a top Dutch newspaper said they would be in favour of an in/out vote along British lines.

They have been inspired by possibility of Britain quitting the bloc on June 23 – and hope 'Nexit' will follow Brexit.

The survey, carried out by De Telegraaf, will spark fears among Brussels chiefs that the bloc is on the verge of falling apart.

Harry van Bommel, MP for Holland's Socialist Party, told "If Britain leaves, that will give other countries courage. 

"So now debate is beginning in the Netherlands about having a referendum on EU membership.

"We cannot go on the way we are – financing Greece, trying to keep countries in the eurozone. The eurozone will break up eventually."

He added: "Because we're in the euro, Dutch people see budget cuts, unemployment going up, and they relay that to the EU.

"Everyone knows the Commissioners in Brussels make €25,000 (£19,500) a month, yet pensions go down and the pension age goes up. 

"These facts make the EU very unpopular. People distrust Europe and some people even hate Europe – it's in an He added: "Because we're in the euro, Dutch people see budget cuts, unemployment going up, and they relay that to the EU.
The whole history of civilization is strewn with creeds and institutions which were invaluable at first, and deadly afterwards.

Walter Bagehot.

At the Comex silver depositories Wednesday final figures were: Registered 22.48 Moz, Eligible 130.54 Moz, Total 153.02 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
No crooks today, just a Russian success story, built on the EUSSR’s folly in imposing American dictated sanctions on Russia following the American War Party’s botched coup in Kiev.

Putin Is Growing Organic Power One T-34 Tank-Tomato at a Time

Backed by billionaires' cash, Russian food exports are now worth more than Kalashnikovs and all other military hardware combined.

June 7, 2016
Deep in the Caucasus, downriver from Europe’s highest peak, North Korean women roam Soviet-era hothouses growing what tycoon Vladimir Evtushenkov is betting will be his next big bounty: the T-34 battle tomato.

The plump hybrids, named for the fearsome tank that helped trounce Hitler, are the pride of the Yuzhny Agricultural Complex, a mass of greenhouses the size of 2,300 football fields between the Black and Caspian seas. Watered by melting ice from towering Mount Elbrus, they and other strains of the fruit are grown here by the millions and trucked mainly to Moscow, 18 hours’ journey north.

Evtushenkov, at 67 the oldest of the top 40 Russians in the Bloomberg Billionaires Index, has impeccable timing. His AFK Sistema, which invests in everything from cellular services to medical clinics, acquired Yuzhny in December, the same month Vladimir Putin re-affirmed achieving food self-sufficiency by 2020 as a national goal. And unlike Josef Stalin’s first five-year plan, which led to the Great Famine, Putin is dangling profit rather than prison to motivate the masses. Once a totem of communism, T-34 is now a symbol of patriotic capitalism.

“This is a very promising area,” Evtushenkov said in an interview.

Stung by oil’s collapse, the ruble’s plunge, financial sanctions over Ukraine and the longest recession of his 16-year rule, Putin, 63, is seeking to minimize Russia’s reliance on markets he can’t control. Counter-sanctions imposed on food imports and an unprecedented raft of subsidies have made many areas of farming more profitable than even crude, which Putin once called Russia’s “golden goose.” Food prices have soared along with inflation, which is running almost double the central bank’s 4 percent goal, shifting even more wealth from hard-hit consumers to well-connected producers.

Take Ros Agro Plc, the sugar and meat producer controlled by billionaire Vadim Moshkovich. It last year received about 3 billion rubles ($46 million) in state support and paid zero tax on profits, helping to boost its net earnings margin to 33 percent, 28 points more than oil major Lukoil PJSC. The company’s Moscow-listed shares have almost doubled in the last year.

Putin has even turned war in the Middle East into a blessing for growers.

After Turkey downed a Russian fighter jet along the Syrian border in November, Moscow responded by banning a range of produce from its former ally, leading authorities to broadcast videos of inspectors enthusiastically bulldozing Turkish tomatoes. Just a few weeks later, with Yuzhny’s biggest competitor swept from the market, Evtushenkov acquired the complex and the organic tomatoes and cucumbers it produces for an undisclosed sum.

 “Russia is able to become the world’s largest supplier of healthy, ecologically clean and high-quality food, which Western producers have long lost,” Putin told parliament after the Turkish ban was imposed.

Russia last year joined dozens of nations in banning the commercial planting of genetically modified organisms and has since barred GMO imports -- putting Putin at the vanguard of an increasingly vocal global movement.

But the crowning achievement of his food strategy so far is grain. Russia overtook the U.S. this year to become the biggest exporter of wheat -- a milestone that followed bumper yields of corn, rice, soybeans and buckwheat.
Brexit The Animated Movie.

Brexit Quote of the week.

'You just never know. That unpredictability is the great thing about life. You change. The world changes. You live in a country where we are still blessed with enormous opportunity. Leave yourself open to the world of possibility. You have the ambition, you have the smarts and you have the toughness. So, turn the page on your biography - you have just started a new chapter in your lives.'

Lloyd Blankfein CEO of Goldman unintentionally backs Brexit in a US speech to graduates.

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?

Today an update on subsidised Tesla (TSLA.) But are they using the right battery? Lithium Iron Phosphate (LFP) batteries are safer.

Tesla's Quest to Build the Machine Behind the Machine

by Katie Fehrenbacher June 6, 2016, 6:12 PM EDT
Next month, electric car maker Tesla will throw what will likely be its biggest, flashiest party to date. On the night of July 29, the company will hold an official “grand opening” for its massive—and highly unusual—battery factory under construction outside of Reno, Nevada.

When the factory is completed it could be one of the largest of any kind, anywhere in the world, and it could double the world’s lithium-ion battery production. The factory, which could be the first of several for Tesla, is meant to eventually churn out enough batteries for 500,000 electric cars a year by 2018. Previously Tesla was planning to make that many batteries by 2020, but the company recently decided to accelerate that goal by two years.

This production ramp may show how confident Tesla is, but the factory is also a mega gamble for the automotive upstart. Tesla needs the battery factory to reduce the cost of its batteries by a third. It’s vital that the company lower the battery costs in order to be able to manufacture its next electric car, the $35,000 Model 3, which is aimed at mainstream consumers.

Working with Panasonic, which is providing its battery cell production machinery, Tesla TSLA 5.37% plans to produce its very first lithium-ion battery cells at the factory later this year, Tesla’s CTO JB Straubel said during the company’s annual shareholder’s meeting last week.

---- When the Gigafactory starts manufacturing its own battery cells, it will be a huge milestone for a brand new and completely redesigned type of factory. That facility will cost around $5 billion, including at least $2 billion from Tesla. The state of Nevada is providing $1.4 billion, in tax breaks, free land, and other beneficence.

During Tesla’s shareholder’s meeting last week, Tesla CEO Elon Musk discussed just how he’s thinking about the design, construction and organization of the factory. He said his attention is focused on the importance of building “the machine that builds the machine.” It takes a hundred to a thousand times more resources, and far more difficulty, to build the machine that builds the machine, compared to creating an individual product, said Musk.

---- Musk said the Gigafactory is being designed “like you’d design an advanced computer”—all of the pieces of the factory will be optimized to be as efficient as possible. The company is bringing in engineers that are used to doing this type of work and have them focus on the factory design and engineering. Engineers usually are met with a series of walls when they work on projects, said Musk, adding “We explain those walls don’t exist here.”

The Gigafactory was only 14% completed as of early May, but the company is already working with Panasonic to “collapse the supply chain and drive down costs,” as Bloomberg put it after a tour of the place. There are already 350 Tesla employees working out of the factory.

The monthly Coppock Indicators finished May

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

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