Thursday, 14 July 2016

The Red Flag Economy.

Baltic Dry Index. 726 +15       Brent Crude 46.79

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

“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.

We are living in an age of the Red Flag economy. Goosed by central banksters globally, stock markets are clearly in bubble territory, but still expecting more free money from the central banksters. But in the real world, red flag after red flag is getting raised about the weakening state of the global economy. I suspect that we are just one European bank implosion away from triggering collapse in continental Europe. Or maybe the trigger to the next global recession still lies in China or Japan. Possibly even Brazil and their increasingly iffy looking Olympic Games. Or a debt repudiation in America’s over indebted malinvestment oil and gas frackers.

Just possibly the American Fedster’s can keep their stock bubble inflating past the US November Presidential election, but my money’s on fail. There are now so many black swans in the lake, that they have driven out all the white ones. Like Napoleon at Waterloo, I think the Grand Army of Central Banksters have finally met their match. QE, ZIRP and NIRP, have attacked and proven as effective as the German 6th Army and 4th Panzer Army at Stalingrad. Deceptively effective at first, overwhelmed in the end.

Below, today’s batch of red flags.

Asian market rally grinds to a halt

Published: July 13, 2016 11:29 p.m. ET

Investors pause ahead of BOE decision on rates

A week-long rally across Asian stocks hit the brakes Thursday, with investors waiting to see whether the Bank of England’s interest-rate decision would make or break further equity gains.

Japan’s Nikkei Stock Average NIK, +0.71%   remained the biggest outperformer in the region, gaining 0.4% to add to its 7.7% ascent this week. Investors’ hopes for fiscal-stimulus policies helped set the benchmark on track to scoring its best weekly performance so far this year.

----But the euphoria in Asian equities from earlier in the week mostly dissipated on Thursday as investors stayed more cautious before the Bank of England’s Monetary Policy Committee meets after Asian markets close.

The meeting “will probably will be the deciding factor on how the markets will react later today,” said Tareck Horchani, a senior sales trader at Saxo Capital Markets in Singapore. “The market is pricing a cut.”

In the rest of the Asia-Pacific region, Australia’s S&P/ASX 200 XJO, +0.21%  was up 0.2%, Korea’s Kospi SEU, +0.02%   was down 0.2% and Hong Kong’s Hang Seng Index HSI, +0.05%   edged down 0.1%. China’s Shanghai Composite Index SHCOMP, -0.42%   lost 0.3%, and Singapore’s Straits Times Index STI, -0.12%   was off 0.1%.

Energy shares in Hong Kong, China and Australia sank after crude oil prices slumped overnight. U.S. oil prices plummeted to a two-month low after data showed U.S. inventories of crude oil and refined products were at a record high. Brent was recently trading at $46.67 per barrel in early Asia trade.

Australia's jobless rate rises to 4-month high

Published: July 13, 2016 9:49 p.m. ET
SYDNEY--Australia's unemployment rate rose to its highest level since February, strengthening the case for the Reserve Bank of Australia to lower rates when it meets early next month.

The jobless rate rose to 5.8% in June, from 5.7% in May. That was in line with the expectations of economists prior to the release of the data by the Australian Bureau of Statistics on Thursday.

The number of people employed rose 7,900, compared with an expected 10,000 rise, the ABS said.

The number of people in full-time work rose by 38,400 in June, while those in part-time work fell by 30,600.

The employment data are under close scrutiny with the RBA recently indicating it is assessing data "to refine its assessment of the outlook for growth and inflation and to make any adjustment to the stance of policy that may be appropriate."

Strong bets are being wagered on a cut in rates in August, when policymakers will also have second quarter inflation data to look over.

Interest rates were last cut in May when the RBA responded to a report showing ultra-benign inflation in the first quarter.

With the RBA's official cash rate now at a record low of 1.75%, there remains scope for rates to be cut further, economists said.

European Equity Strategists Double Down on Gloom After Brexit

July 14, 2016 — 12:00 AM BST
Stock forecasters at European banks are resigning themselves to the prospect of steep losses for the region’s equities in 2016.

Strategists who kept predictions practically untouched in the weeks leading up to the Brexit vote have just turned the most bearish in 10 months. They estimate the Euro Stoxx 50 Index will end the year just a little above where it is now, implying an annual decline of 9.2 percent, compared with June calls for a 3.3 percent drop. That amounts to the steepest cut in monthly predictions since October.

While stocks slumped after the Brexit vote, forecasters slashed projections even faster, signaling little room for a rebound in the rest of the year. The fallout from the U.K.’s vote to leave the European Union is the latest in a string of threats plaguing euro-area equities. Concerns over slowing economic growth and the strength of the banking sector, especially in Italy, have dragged the Euro Stoxx 50 lower in the first two quarters even as the European Central Bank kept up unprecedented stimulus measures.

“Brexit was the straw that broke the camel’s back,” said Michael Hewson, a market analyst at CMC Markets in London. “People are now focusing on the next domino -- and the next domino is Italy. Europe’s problems start and finish with the health of the banking sector -- it’s not just the elephant in the room, it’s the elephant, rhinoceros and T. Rex rolled into one.”

Oil Traders Hoarding Most Oil Since 2009 Amass North Sea Fleet

July 13, 2016 — 5:12 PM BST Updated on July 14, 2016 — 12:01 AM BST
Oil traders increased the fleet of ships deployed in the North Sea to store crude, the latest sign of faltering demand that has triggered the biggest build up of stockpiles at sea since 2009.

Nine tankers holding about 9 million barrels of the major North Sea crude grades are floating off the U.K.’s coast, up from 7 million in May, according to a survey of oil traders and ship-tracking data compiled by Bloomberg. The volume of oil in storage on ships worldwide reached 95 million barrels at the end of June, the highest since the 2008 to 2009 recession gave traders an incentive to hold supplies for later delivery, the International Energy Agency said.

“Unlike 2009 when volumes at sea increased” because oil prices made the activity profitable, “today it is driven by logistical and marketing issues,” the Paris-based IEA said in its monthly report Wednesday.

The accumulation of stockpiles shows that even as excess oil production is fading and global markets are re-balancing, the recovery process will be a bumpy ride. The boost in world fuel demand from low prices appears to be fading, with a report from the Energy Information Administration on Wednesday showing gasoline use in the U.S., the biggest oil user, sliding at a time when sales normally surge.

Most of the cargoes floating idle in the North Sea have yet to find buyers and will probably remain where they are for some time because of subdued demand in Europe, according to three traders who asked not to be identified. The cargo that’s been in place longest, in a supertanker anchored off the east coast of England named Maran Thetis, has been on the water since April 23.

Ian Taylor, the chief executive officer of Vitol Group, the biggest independent oil trader, said in a Bloomberg television interview last week that the contango -- the premium paid on future oil deliveries over current supplies -- isn’t wide enough to make stockpiling at sea profitable. Any use of ships for storage now is probably out of necessity amid unloading delays at some ports, he said.

Oil Patch Buying Time With Stock Sales as Bust Enters Third Year

July 13, 2016 — 8:49 PM BST Updated on July 14, 2016 — 5:01 AM BST
U.S. oil and gas producers are selling shares at record speed, a sharp turnaround from past years when debt markets were the industry’s favored source of cash.

There are two main reasons behind the shift, and neither is particularly bullish. First, the downturn made it tougher and more expensive to borrow. Second, using equity can help strengthen a company’s balance sheet at a time when the oil bust is dragging into its third year.

“Last year was about survival,” said Jason Wangler, an analyst at Wunderlich Securities in Houston. “If you survived last year, this year is about preparing for the future.”

U.S. energy producers have raised $16 billion from share sales since the start of the year, more than half of the total $29 billion raised by the industry, according to data compiled by Bloomberg. By comparison, equity accounted for 25 percent or less of the capital raised for the past five years.
Turning from debt markets to stock sales can burnish companies’ balance sheets in two ways. The first is simple: repay and refinance debt. The second is by buying up oil and gas prospects to add assets and cash flow, which makes debt look less onerous. U.S. producers are using both.
“The whole name of the game is trying to survive until oil gets back up to $60 or $70,” said Spencer Cutter, a credit analyst with Bloomberg Intelligence. “That may take a year or two. Nobody knows.”

U.S. challenges China raw material export duties in trade enforcement push

Wed Jul 13, 2016 11:20pm EDT
The United States challenged China's export duties on nine key metals and minerals on Wednesday, arguing they violate Beijing's commitments to the World Trade Organization (WTO) and give an unfair advantage to Chinese manufacturers.

China said it respected WTO rules and that the duties had been imposed as part of efforts at environmental protection.

The U.S. move came with the Obama administration eager to demonstrate that it is taking a tough stance on enforcing international trade agreements, which have come under fire from Republican presidential candidate Donald Trump and from within Obama's own Democratic party.

Vice President Joe Biden later on Wednesday was due to tout President Barack Obama's trade enforcement record as being more aggressive than past administrations in a speech at the Port of San Diego, with 22 WTO cases filed against trading partners since 2009 - including 16 aimed at China.

U.S. Trade Representative Michael Froman said the raw materials case seeks to remove China's export duties of 5 percent to 20 percent on antimony, cobalt, copper, graphite, lead, various magnesia compounds, talc, tantalum and tin, which it said are key inputs into U.S. industries, including aerospace, autos, electronics and chemicals.

He said the duties impose higher costs on U.S. manufacturers, while Chinese competitors do not have to pay them, encouraging companies to locate production in China.

"These duties are China's attempt to game the system so that raw materials are cheaper for their manufacturers and more expensive for ours," Froman said in a statement.

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some. The sight of this arbitrary rearrangement of riches strikes not only at security, but at confidence in the existing distribution of wealth. Those to whom the system brings windfalls, beyond their deserts and even beyond their expectations or desires, become ‘profiteers’, who are the object of the hatred of the bourgeoisie, whom the inflationism has impoverished, not less than of the proletariat. As the inflation proceeds and the value of the currency fluctuates wildly from month to month, all permanent relations between debtors and creditors, which form the ultimate foundation of capitalism, become so utterly disordered as to be almost meaningless; and the process of wealth-getting degenerates into a gamble and a lottery.

Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and it does it in a manner which not one man in a million is able to diagnose.

J. M. Keynes.

At the Comex silver depositories Wednesday final figures were: Registered 25.83 Moz, Eligible 125.76 Moz, Total 151.59 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today the People’s Paradise of socialist, oil rich, Venezuela. What GB might look like under the loony left communism of the Corbynistas.

Venezuela just made running a business more impossible

12 July 2016
Businesses in Venezuela have a problem.

Actually, almost everyone in Venezuela has a great many problems. Starvation, for example. Shortages of basic goods. Dysfunctional and understaffed hospitals which lack medications. A corrupt and increasingly militarised government determined to protect the incumbent president, Nicolás Maduro, at all costs.

But businesses, especially factories, face another, more specific problem. As Venezuela’s economy has ground to a halt and its currency has depreciated by nearly two thirds in the past year, the raw materials needed for manufacturing have become prohibitively expensive, or simply impossible to come by. This is not helped by the government’s steep import tariffs and currency restrictions, nor by the rock-bottom price controls which make operating a business an utterly unprofitable enterprise.

This disaster is entirely of President Maduro’s own making. But rather than acknowledge that 17 years of Chavismo socialism have been a terrible mistake that has wrecked Venezuela, Maduro is tightening the iron fist of state control.

Today, the BBC reports that the Venezuelan government has seized a factory which makes hygiene products like toilet paper, owned by the US company Kimberly-Clark. Kimberly-Clark’s crime? Closing the factory due to an inability to obtain raw materials.

The Venezuelan Labour Minister, Oswaldo Vera, has called the closing of the factory “illegal”, and promised that the factory will continue to operate “in the hands of the workers”. To which the obvious question must be: with what materials? How does the government think the factory can re-open without the raw materials it needs?

There is then the issue of the chilling authoritarianism of declaring a privately-owned company broke the law by ceasing business. In May, President Maduro threatened to arrest and jail the owners of factories which stop producing, saying Venezeula’s productive capacity was “being paralysed by the bourgeoisie”. In actual fact, it is being paralysed by the government’s radically anti-business policies, which include such threats. What company, whether domestic or international, will want to set up a factory in Venezuela under such tyrannical conditions, knowing it is impossible to make a profit and that owners risk arrest by trying?

Maduro has blamed the latest crisis, as he has all previous crises, on an economic war being waged against his regime by the opposition in collusion with US forces. The simple fact is he has left business owners no options, creating a climate in which it is impossible to operate. The daily protests against food shortages across the country show that Venezuelans are getting desperate. Nicolás Maduro’s socialist regime is running out of time.

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?

Off-grid battery and solar energy project in Africa

Wednesday, Jul 13, 2016

Aquion Energy and SolarAfrica Deliver Sustainable Off-Grid Solar Power System at Wildlife Conservancy in Kenya

Loisaba Conservancy is now powered by a clean solar-plus-storage microgrid that reduces their diesel use by 95%

Aquion Energy, Inc., manufacturer of Aqueous Hybrid Ion (AHI™) batteries and energy storage systems, and SolarAfrica, a leading African Solar Energy Services Company, today announced a newly installed off-grid microgrid at the Loisaba Conservancy, which is a hub for wildlife research and a world-class ecotourism destination in Kenya, East Africa. The microgrid, which was funded, designed, installed, and integrated by SolarAfrica, consists of two independent systems, each of which has 106 kWh of Aquion batteries paired with a 37 kW solar array. This off-grid solar-plus-storage system has replaced diesel generators to power a commercial laundry, swimming pool, kitchen, business services, lighting, cooling, and other facility loads.

“Loisaba comprises 56,000 acres of pristine lands, populated by hundreds of animal species and enjoyed by thousands of visitors and guests each year,” said Tom Silvester, CEO of the Loisaba Conservancy. “We embrace the idea of living lightly on the earth, minimizing our carbon footprint and maintaining a clean, safe, and sustainable environment. The use of Aquion saltwater batteries in tandem with SolarAfrica’s solar powered solutions is perfectly aligned with our approach to preserving nature, enabling us to generate power from the sun and store it for later use.” 

At Loisaba, the solar array powers various loads from the facilities and pools, while also charging the Aquion batteries during the day. The batteries are discharged to provide power at night and during periods of cloud cover. This solution greatly reduces the use of noisy, high-emissions diesel generators, which had previously been the primary power source for the property. The result is a new standard in eco-friendliness and sustainability for ecotourism lodges in Africa.

Lodges that are located off-grid have traditionally used diesel generators, often in combination with lead-acid batteries, which are known for their toxicity and relatively short lifespan under deep cycling and partial state of charge usage. Aquion’s Aspen batteries offer a clean, sustainable, and long-lasting alternative which can operate at high ambient temperatures and does not degrade from partial state of charge cycling. Aspen batteries have a unique and environmentally friendly electrochemical design, and are the first and only batteries in the world to be Cradle to Cradle Certified™.

Dr. Kobus van Tonder, Project Manager of SolarAfrica, mentioned that there were several highlights of this project for him and his team: “The outcome of this project has made many significant changes to the way we use energy and how we perceive it. We noticed how the lodge quickly descended into a blissfully quiet state, as the constant humming of generators were turned off. Another great benefit of switching to solar energy, and storing it effectively, is that it’s now significantly cheaper than running diesel generators, which also means that the consumption of diesel decreases, as does the carbon footprint.”

Van Tonder concluded by saying, “Battery technology is constantly evolving. This project created a lot of interest amongst the tour operators and investors alike. Aquion’s batteries are low maintenance compared to other storage products in the industry, and they removed the typical need for cooling, air-conditioning, and special ventilation.”

Redefining Energy Storage

At Aquion, we are changing the energy storage paradigm by manufacturing high-performance batteries that are clean, safe, and sustainable.

Aquion Energy manufactures batteries that are safe, reliable, sustainable, and cost-effective. Our Aspen batteries are based on our proprietary Aqueous Hybrid Ion (AHI™) chemistry which has a unique environmentally-friendly electrochemical design, and they are the first and only batteries in the world to be Cradle to Cradle Certified™. Aspen batteries contain no heavy metals or toxic chemicals and are non-flammable and non-explosive, making them the safest batteries in the world – designed for use in pristine environments, island locations, homes and businesses. View our brochure.

The monthly Coppock Indicators finished June

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

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