Tuesday, 19 July 2016

Just Watching.

Baltic Dry Index. 745 +07       Brent Crude 47.74

LIR Gold Target in 2019: $30,000.  Revised due to QE programs.
“If we went back on the gold standard and we adhered to the actual structure of the gold standard as it existed prior to 1913, we’d be fine. Remember that the period 1870 to 1913 was one of the most aggressive periods economically that we’ve had in the United States, and that was a golden period of the gold standard. I’m known as a gold bug and everyone laughs at me, but why do central banks own gold now?” 
Alan Greenspan. June 28, 2016.
Today, the less reported news, with overtones of 2007, as China repeats America’s triple-A global securities scam.  A fool and his money are soon parted, and never more so in the great central bankster scam of negative interest rates.
But first the update from Asia.

Asian shares dip, crude oil extends losses

Mon Jul 18, 2016 11:26pm EDT
Asian shares slipped on Tuesday, as a downturn in crude oil curbed the enthusiasm from fresh record highs on Wall Street.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was down 0.6 percent, moving away from a nine-month high touched last week which put it into technically overbought territory.

China's yuan steadied against the dollar, a day after slipping below the psychologically important 6.7 level for the first time in more than five years. Still, traders expect downward pressure on the currency to persist.
China stocks were lower, with both the CSI300 index .CSI300 of the largest listed companies in Shanghai and Shenzhen and the Shanghai Composite Index .SSEC down 0.4 percent.

The Dow Jones industrial average .DJI and the S&P 500 .SPX both logged fresh record highs on Monday on hopes that a decline in U.S. corporate earnings is bottoming out. [.N]

"It's hard to maintain consistent optimism when markets attain such high levels, and some profit-taking is natural," said Ayako Sera, market economist at Sumitomo Mitsui Trust Bank in Tokyo, who noted that weaker oil prices were taking their toll on related sectors.

Pressure remained on crude oil prices after they settled down more than 1 percent on Monday after rising stockpiles of crude and refined fuel intensified fears of another major supply glut.

----Japan's Nikkei stock index .N225 pared early gains but was still up 0.5 percent, as markets reopened after a public holiday on Monday and responded to a weaker yen.

In the previous week, the benchmark index had gained 9.2 percent to notch its biggest weekly gain since December 2009, helped by Wall Street as well as hopes that the Bank of Japan will deliver further stimulus as early as its next policy meeting later this month.

Japanese policymakers won't go as far as funding government spending through direct debt monetization, but might pursue a mix of aggressive fiscal and monetary expansion to battle deflation, according to sources familiar with the matter.
Now back to the less reported news.

It’s like déjà vu all over again.

Yogi Berra. New York Yankees Legend.

China's Local Debt Problem Goes Global

A very local problem in China is being exported at an alarming rate.

Debt from special-purpose vehicles linked to municipal and provincial governments -- leverage that central authorities are trying (unsuccessfully) to extinguish -- is becoming more common in overseas markets. What's worse, lately it's been the weakest cities and provinces panhandling to international investors.
Since June, as many as six local government financing vehicles  have sold dollar bonds, bringing the total issued by such entities to at least $4 billion this year, just shy of the record $4.1 billion logged in all of 2015. Three offerings were scored below investment grade by Fitch, whereas prior to 2016, only one junk security of its kind had surfaced internationally.

Investors should ask why these localities are going abroad when all their revenue is onshore. Could it be that they're having a harder time raising funds domestically?

hat wasn't always the case. 

After a 1994 law banned regional authorities from issuing bonds directly, LGFVs were set up in their thousands in China to fund infrastructure projects like roads and bridges. Beijing lost track of how big the liabilities were and deployed about 50,000 auditors across the country in 2014. That crackdown culminated in authorities' decision last year to open the municipal debt spigots and use funds raised that way to repay local governments' off-balance-sheet debt.
Municipal bond issuance last year

As a result, provincial and municipal governments issued an unprecedented 3.8 trillion yuan ($567 billion) directly last year, Bloomberg-compiled data show, and may sell as much as 5 trillion yuan this year.
But now, local investor appetite looks to be fading, and Fitch said in March it expects more low-rated LGFVs will seek alternative sources of funding faced with borrowing restrictions at home.

Cue money managers in New York, London and Singapore, who hopefully have short memories and won't mind being used to mop up debt Chinese investors don't want.

It's been working a treat to date. Investors are attracted by the relatively higher yields these bonds offer, and the notion there may be some state backing. Jiangsu Hanrui Investment Holding Co., a LGFV based in Zhenjiang in China's eastern Jiangsu province, sold $300 million of bonds due 2019 with a 4.9 percent coupon on June 23. That same day, similarly rated notes from developer Greenland were yielding 4.2 percent.

Ships worsen air pollution over China, killing thousands: study

Mon Jul 18, 2016 12:10pm EDT
A boom in shipping is aggravating air pollution in China and other nations in East Asia, causing thousands of deaths a year in a region with eight of the world's 10 biggest container ports, scientists said on Monday.

Often overlooked compared to cars and factories that are far bigger causes of smog, ship traffic has more than doubled off East Asia since 2005 and some pollution from the fuel oil of ships wafts inland, they said.

The Chinese-led study estimated that sulfur dioxide, which generates acid rain, and other pollution from ships caused an estimated 24,000 premature deaths a year in East Asia, mainly from heart and lung diseases and cancer.

About three-quarters of deaths were in China, and others mainly in Japan, Taiwan, Hong Kong, Macau and South Korea, according to the study published in the Journal Nature Climate Change based on satellite data tracking almost 19,000 vessels.

---- China, where Shanghai is the world's busiest container port, will start demanding cleaner fuels for ships in coastal regions from 2019. China has thousands of protests every year sparked by concerns about environmental degradation.

North America and parts of Europe already require that ships operating close to land use more costly, less polluting fuel with a sulfur content below 0.1 percent. The U.S. Environmental Protection Agency expects the North American controls will prevent 14,000 premature deaths a year by 2020.

Worldwide, the U.N.'s International Maritime Organization (IMO) plans to cut the sulfur limit for ships' fuel to 0.5 percent from 2020 from a current 3.5 percent.

Militants strike at heart of Nigeria’s oil industry

Insurgency reflects anger at ‘forgotten’ poverty in resource-rich Niger Delta
July 18, 2016
When Edafa, a former militant from Nigeria’s restive oil-rich Delta, joined a government-funded programme to train as a welder in Malaysia, he dreamt of setting up his own business. But after three years of joblessness and frustration, he is now using his skills to blow up oil pipelines.
The 28-year-old has returned to his previous life, carrying out attacks for the Niger Delta Avengers, the latest group to lead an insurgency that is creating havoc for Africa’s largest oil industry.

The rise of the Avengers since the start of the year reflects the anger that is coursing through towns and impoverished villages across the swampy Delta as President Muhammadu Buhari’s grapples with Nigeria’s worst economic crisis in decades.

“President Buhari forgets us in the Niger Delta, and we are the source of Nigeria’s income,” Edafa, who did not want his full name used, says in his home town of Ughelli, where there is rarely electricity and women cook over firewood and draw water from wells. “We want him to hear our cry.”

Attacks by the militants — who say destroying oil wells and the pipelines snaking through their communities is the only way to be heard — reduced oil production by about 700,000 barrels a day to 1.5m b/d in May. As a result, Nigeria slipped from its position as Africa’s top oil producer.

Repairs have pushed output back up by at least 200,000 b/d. But the blow to production has been disastrous for Mr Buhari, a former army general who won elections last year.

The cash-strapped federal government has yet to secure funds to plug a $11bn deficit in this year’s budget, while many state governments have not paid salaries for months.

And the poverty that blights the Delta — despite its oil riches — is partly to blame for Edafa’s and others’ return to militancy. Each time he participates in an Avengers’ “operation” he earns 20,000 naira ($70).

The Delta has a long history of rebellion against the oil industry. Edafa’s eight-month training programme in Malaysia came only after he laid down his gun as part of a government amnesty deal in 2009 with other militant groups.

He wanted to open his own welding shop, support his family and provide jobs to the droves of idle young men in Ughelli, which sits atop one of the country’s most productive gasfields.

Instead, he joined the ranks of the unemployed.
He blames corrupt former officials whom he alleges stole start-up funds he and other retired militants were promised. He does not see a brighter future under the new government, which he perceives to be biased against his southern region as it is led by Mr Buhari, a northerner.
“It’s very easy when people feel disillusioned, disconnected and unattended to for them to return back to the ways they know in order to survive,” says JonJon Oyeinfe, a local activist.
Many of the Avengers’ demands — including greater control of the oil wealth and the development of basic infrastructure — reflect those of previous insurgencies. But frustrations have been exacerbated because of the way Mr Buhari is seen to have dealt with the Delta.
In the early days of his presidency, he was deemed to be ignoring the region. When the attacks on infrastructure began, he vowed to “crush the criminals” behind them.

Attempted coup adds to strains in uneasy U.S.-Turkey relations

Mon Jul 18, 2016 7:30pm EDT
The U.S. government can do little for now but voice its concern as Turkish President Tayyip Erdogan uses a failed coup attempt to purge thousands of his opponents and demand the extradition of a dissident cleric living in Pennsylvania.

Erdogan's decision to allow the resumption of flights at the Incirlik Air Base, which is important in the United States' fight against Islamic State, has averted an immediate confrontation between the two allied countries.

    But U.S. officials have been rattled by the extent of Turkey's response to the failed coup, and say the relationship going forward will depend on how Erdogan pursues the cleric, Fethullah Gulen, and how far the crackdown extends.

---- "What happens to our relationship with Turkey will largely depend on how Turkey itself works its way through the investigations and the decisions they make in the wake of this attempted coup," a senior U.S. official said.Erdogan has accused Gulen of being behind the coup and said on Monday that his government will formally request the cleric's extradition within days.

Gulen flatly denies any involvement in the coup. Some in the U.S. administration think the detention of thousands of military officers, police, judges and prosecutors in the wake of the failed plot already has been excessive. [nL8N1A422B]

"We believe Turkey has gone beyond what we wanted to see," a second official said, speaking on condition of anonymity.

U.S. Secretary of State John Kerry says Turkey has the right to prosecute those involved in the coup but, concerned about human rights and democracy in a key NATO ally, cautioned it against going too far.

"We stand squarely on the side of the elected leadership in Turkey. But we also firmly urge the government of Turkey to maintain calm and stability throughout the country," he said in Brussels on Monday.

European Union foreign policy chief Federica Mogherini called on Ankara to avoid steps that would damage the constitutional order.

At stake is Turkey's long-held hope to become part of the European Union, and Mogherini made clear that if Turkey imposed the death penalty it would be a deal breaker.

NO LEVERAGE As a practical matter, however, the United States and its allies may have no leverage over Turkey's internal affairs.
"There is nothing the U.S. government can do to dissuade President Erdogan from purging the Turkish military and judiciary from people he views as a threat," said Matthew Bryza, a former senior White House adviser on Turkey. "President Erdogan will simply do this, period. He views such measures as both a matter of survival and then as a means to significantly greater power."

You can observe a lot by just watching.
Yogi Berra.

At the Comex silver depositories Monday final figures were: Registered 27.18 Moz, Eligible 125.53 Moz, Total 152.71 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today we return to a topic we’ve well covered before, when will Italy’s insolvent banks take out each other, Italy and Deutsche Bank? As usual in the EUSSR, no one takes any responsibility or any action. But inaction only leads to an even bigger bust up when it comes. Though we covered Italy’s growing banking crisis in the LIR during the referendum campaign, it was largely ignored by main stream media during the campaign, and kept out of the Brexit debate. Cui bono?

"Gold, unlike all other commodities, is a currency...and the major thrust in the demand for gold is not for jewelry. It’s not for anything other than an escape from what is perceived to be a fiat money system, paper money, that seems to be deteriorating."

Alan Greenspan, ex-US Federal Reserve Chairman, August 23, 2011

Why Italy's banking crisis will shake the eurozone to its core

Tim WallaceSzu Ping Chan16 July 2016 • 4:41pm
They call them le sofferenze – the suffering. The imagery is striking, the thousands of sofferenze across Italy, unwanted and ignored, a problem unsolved.

But despite the emotional name, these are not people. They are loans. Bad debts, draining banks of profits and undermining economic growth.

The name is less clinical than the English term “non-performing loans”, a reflection of the Italian authorities’ emotional rather than business-like approach to the problem.

None the less, the loans are indeed causing real suffering. The €360bn (£300bn) of sofferenze from Italian banks show borrowers are weighed down with debts they cannot afford, while the banks are struggling to offer new credit to the households and firms that need them.
When other countries such as the UK, Ireland and Spain ran into trouble, they bit the bullet and cleaned up their banks quickly. Italy did not.
In a way, Italy’s authorities had good intentions. When loans turn bad and banks lose money, someone has to pay. It should be the banks’ investors, the shareholders and bondholders who take the risk of investing in return for the chance of profits. Unfortunately in Italy, households are keen investors in bank bonds, and would be badly burnt if they had to face up to those losses.
So nothing was done. The bondholders have so far kept sight of their savings, and the banks have been allowed to ignore their bad loans. It saved the country some short-term pain, but the financial problems never went away.
Now they have spread to the wider economy, and are morphing into a political crisis with implications across the EU. It could bring down Italy’s government.

If no compromise is reached between Rome, which wants to protect bondholders, and the EU, which wants to enforce the rules, it could even bring down the eurozone.

“This could be a bigger risk than Brexit,” says a lawyer who is close to the situation.

“The Greeks are desperate to be anchored into Europe, they are willing to suffer and suffer and suffer to stay in – I am not sure that Italy is willing to suffer.” The stakes are that high, and nobody knows whether the EU can muddle through another crisis, or if shock waves from Italy will split the union. Long nights and fraught nerves lie ahead.

This is just the latest phase of the eurozone’s seemingly never-ending crisis, and the International Monetary Fund’s latest assessment of the currency area’s third-largest economy shows why Italy is the latest focal point.

The country faces a slow crawl back to economic health, the IMF warned last week. Productivity growth remains weak, debt is still climbing and the economy can’t prosper while its banking sector is sick.

Under current projections, the economy will not get back to its pre-crisis size until 2025. In other words, Italy faces not one, but two lost decades.

As a result, its banks are sitting on a vast stockpile of bad loans, and the situation will only worsen if the status quo continues.

"Deficit spending is simply a scheme for the 'hidden' confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights."

Alan Greenspan. 1966.

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?

New way to turn electricity into light, using graphene
Posted on July 18, 2016

When an airplane begins to move faster than the speed of sound, it creates a shockwave that produces a well-known "boom" of sound. Now, researchers at MIT and elsewhere have discovered a similar process in a sheet of graphene, in which a flow of electric current can, under certain circumstances, exceed the speed of slowed-down light and produce a kind of optical "boom": an intense, focused beam of light. 

This entirely new way of converting electricity into visible radiation is highly controllable, fast, and efficient, the researchers say, and could lead to a wide variety of new applications. The work is reported in the journal Nature Communications, in a paper by two MIT professors — Marin Soljačić, professor of physics; and John Joannopoulos, the Francis Wright Davis Professor of physics — as well as postdoc Ido Kaminer, and six others in Israel, Croatia, and Singapore. 

The new finding started from an intriguing observation. The researchers found that when light strikes a sheet of graphene, which is a two-dimensional form of the element carbon, it can slow down by a factor of a few hundred. That dramatic slowdown, they noticed, presented an interesting coincidence. The reduced speed of photons (particles of light) moving through the sheet of graphene happened to be very close to the speed of electrons as they moved through the same material.

Graphene has this ability to trap light, in modes we call surface plasmons," explains Kaminer, who is the paper's lead author. "Plasmons are a kind of virtual particle that represents the oscillations of electrons on the surface. The speed of these plasmons through the graphene is "a few hundred times slower than light in free space," he says. 

This effect dovetailed with another of graphene's exceptional characteristics: Electrons pass through it at very high speeds, up to a million meters per second, or about 1/300 the speed of light in a vacuum. That meant that the two speeds were similar enough that significant interactions might occur between the two kinds of particles, if the material could be tuned to get the velocities to match. That combination of properties — slowing down light and allowing electrons to move very fast — is "one of the unusual properties of graphene," says Soljačić. That suggested the possibility of using graphene to produce the opposite effect: to produce light instead of trapping it. "Our theoretical work shows that this can lead to a new way of generating light," he says. 

Specifically, he explains, "This conversion is made possible because the electronic speed can approach the light speed in graphene, breaking the 'light barrier.'" Just as breaking the sound barrier generates a shockwave of sound, he says, "In the case of graphene, this leads to the emission of a shockwave of light, trapped in two dimensions."

---- There are many different ways of converting electricity into light — from the heated tungsten filaments that Thomas Edison perfected more than a century ago, to fluorescent tubes, to the light-emitting diodes (LEDs) that power many display screens and are gaining favor for household lighting. But this new plasmon-based approach might eventually be part of more efficient, more compact, faster, and more tunable alternatives for certain applications, the researchers say.
You wouldn’t have won if we’d beaten you.

Yogi Berra.

The monthly Coppock Indicators finished June

DJIA: 17930  -14 Up NASDAQ:  4843 -08 Down. SP500: 2099 -10 Up.

No comments:

Post a Comment