Tuesday, 12 July 2016

Trust Me, I’m A Central Bankster.

Baltic Dry Index. 704 +01       Brent Crude 46.39

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

Never believe anything in politics until it has been officially denied.

Count Otto von Bismarck.

Move along now. Nothing to see here. Hopium at work once again. In central banksters we trust. This won't end well.

Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof.

John Kenneth Galbraith.

Year of Pain Erased for Bulls as S&P 500 Surges Back to Record

July 11, 2016 — 10:02 PM BST Updated on July 11, 2016 — 10:24 PM BST
It’s a year most investors probably want to forget. Now, maybe they can.

After 13 months in which the S&P 500 Index twice plunged into corrections and daily volatility surged, the benchmark gauge for American equity just rebounded back into record territory, rising 0.3 percent Monday to surpass the previous high of 2,130.82 dating to May 21, 2015. Shares have rallied in seven of the last nine days as reports signaled strength in the U.S. economy.

The breakout snapped the longest stretch for U.S. stocks without fresh highs outside a bear market since 1985, dealing a blow to skeptics who’ve increasingly warned the seven-year rally was doomed. It happened as individuals yanked money from mutual funds, short sellers sat on more bets than any time since the financial crisis and demand of defensive stocks boomed.

“When I look at this market and when I look at this rally, it still looks unloved,” said Kelly Bogdanov, a portfolio analyst at RBC Wealth Management in San Francisco. “It feels like institutional investors have been dragged, kicking and screaming, off of the sidelines. Until we see more people piling in, I think that’s a good sign that the market can work its way up.”

Bogdanov is voicing a contrarian bull case that has prevailed since the rally began in 2009: that skepticism is a more potent fuel for stock prices because it prevents the kind of indiscriminate buying that historically has caused bubbles to burst. Stocks are able to rise as investors are drained of doubt and join the ranks of buyers.

Not that the economy’s hasn’t cooperated. Reports last week showed the services sector and hiring remained robust, pushing a gauge that measures how much U.S. economic data is exceeding forecasts to the highest in more than a year.

The elevation breathes life back into the second-longest bull market in history after stocks endured the first interest-rate increase by the Federal Reserve in almost a decade and the longest earnings slump since 2009. Shares tracked by the S&P 500 recovered from selloffs in August and January that exceeded 10 percent, buoyed by speculation the world’s biggest economy can keep expanding and profit growth will return amid a stabilization in the dollar and oil.

The record, the 109th since the S&P 500 first eclipsed its October 2007 peak three years ago, came after the index had spent 285 days trading below its previous high. Since 1946, there have been 12 times when the S&P 500 took longer than now to get to a fresh high. In all but one the market was higher 12 months later, with the S&P 500 climbing an average 13 percent in the ensuing year, data compiled by Bloomberg show.

Italian bank problems not an "acute crisis" - Dijsselbloem

Mon Jul 11, 2016 8:26am EDT
Italy's troubled banks do not represent an acute crisis and resolving their problems will be more of a gradual process than a big fix, Eurogroup President Jeroen Dijsselbloem said on Monday.

Bank of Italy's Governor Ignazio Visco said on Friday that public money should be used to help Italy's troubled banks in a financial system that was "full of risk".

"Yes, there are issues of non-performing loans in Italian banks, but that's not a new issue," Dijsselbloem said before a meeting of the Eurogroup of euro zone finance ministers, which he chairs.

"It needs to be dealt with, it will have to be dealt with gradually. There will be no big solutions. I don't think that's possible for this kind of issue and it's not an acute crisis."

The European Union had clear rules on how to deal with banks facing difficulties and there was only a limited role for the Eurogroup.

"There is not much we can do," he said. "The European Commission and the European banking supervisor has to talk to the Italians using the rules (we have set out)," he added.

IMF Urges Action on Italy’s Retail Investors’ Bank Bail-In

July 11, 2016 — 11:00 PM BST
The International Monetary Fund called for action over concerns relating to the bail-in of retail investors in Italy, noting that “very high” amounts of non-performing loans and slow judicial processes were straining bank balance sheets.

Financial industry reforms “are critical to entrench financial stability and support the recovery,” the IMF said in a statement following its regular review of the Italian economy. The Washington-based fund said that NPLs appeared to be stabilizing at around 18 percent of total loans.

The IMF said “concerns related to the bail-in of retail investors should be dealt with appropriately.”

Talks between Italy and the European Commission to recapitalize Banca Monte dei Paschi di Siena SpA and other banks are stuck on whether creditors should face losses if taxpayer funds are used, according to people familiar with the discussions. Rules that took full effect this year require bondholders and shareholders to absorb losses in failing lenders in the event of a rescue, a process dubbed a “bail-in.”

Italy favors a precautionary recapitalization under the European Union’s bank-resolution rules, which allow governments to bolster lenders when capital gaps emerge in stress tests, said the people, who asked not be identified because the talks are private.

Italian authorities are racing to shore up a financial system burdened by about 360 billion euros ($398 billion) of troubled loans, amid the ECB’s increasing pressure on Italian lenders to clean up their balance sheets and tackle troubled loans that are undermining lending.

The IMF also urged measures including more intensive use of out-of-court debt restructuring mechanisms, strengthened supervision, and a systematic assessment of asset quality for banks not already subject to comprehensive assessment by the European Central Bank.

----“Risks are tilted to the downside, including from financial market volatility, the refugee surge, and headwinds from the slowdown in global trade,” the fund’s statement said. “This growth path would imply a return to pre-crisis (2007) output levels only by the mid-2020s and a widening of Italy’s income gap with the faster growing euro area average.”

The IMF said “public debt has edged up to close to 133 percent of GDP, a level that limits the fiscal space to respond to shocks.”

IMF says Italy faces 'monumental challenge', cuts growth outlook

Mon Jul 11, 2016 6:05pm EDT
Italy's economy will grow by less than one percent this year and only marginally faster in 2017, the International Monetary Fund said on Tuesday, cutting its previous forecasts as a result of Britain's decision to leave the European Union.

The outcome of last month's referendum in Britain has heightened volatility on financial markets and increased downside risks for Italy, the Fund said in a report following its annual Article IV meetings with the Italian authorities.

The euro zone's third-largest economy is now seen growing at "just under 1 percent in 2016 and at about 1 percent in 2017," the IMF said. Its previous projections, at the end of May, were for growth of 1.1 percent this year and 1.25 percent in 2017.

Economists have been racing to downgrade Italy's outlook since the British referendum. Employers' lobby Confindustria now sees growth of just 0.8 percent this year and 0.6 percent in 2017.

Italy, long one of Europe's most sluggish economies, will struggle to close the gap with its peers even if recent reforms are fully implemented, the IMF report said.

Only in around 2025 will Italian output return to its 2008 peak before the global financial crisis, it said. In the same period, growth among Italy's euro zone partners is expected to rise by 20–25 percent above their pre-crisis levels.
In the ever more bizarre news category, spreading NIRP has the bond gamblers chasing bond yield in ever more unlikely places. What could possibly go wrong?

Ukraine Bonds Trade Like Crimea Never Happened Amid Yield Hunt

July 11, 2016 — 10:01 PM BST
The global search for bond returns has pushed Ukrainian government debt to highs not seen since before the first bullets were fired amid anti-government protests on Kiev’s central Maidan square more than two years ago.
The yield on the country’s three-year dollar debt fell below 8 percent on Monday for the first time since January 2014, when pro-Russian president Viktor Yanukovych was still clinging to power and the Crimean peninsula was part of Ukraine. Yields have tumbled more than four percentage points and the local currency has rallied since the peak of a government standoff in February this year before the appointment of a new prime minister diffused a fresh political crisis.
The rally signals investors are wagering on the country’s recovery after a $15 billion debt restructuring last year and as the government edges closer to unlocking the next payment in a $17.5 billion bailout from the International Monetary Fund. Investors worldwide are also looking for higher-yielding assets at a time when bets for a new bout of central bank stimulus push almost $10 trillion in securities tracked by Bloomberg to yield less than zero.

"Ukraine looks attractive in the ongoing search for yield," said Fyodor Bagnenko, a managing director for fixed-income trading at Dragon Capital in Kiev, who says the nation’s Eurobond market is dominated by international investors. "The country is moving toward receiving the next tranche of IMF funds as well as $1 billion covered by a U.S. government guarantee."

---- Ukraine’s bonds traded as low as a third of their face value before investors negotiated a restructuring last year. The deal included compensation for a 20 percent reduction to principal via warrants that tie payments to the nation’s economic performance.

Slowing consumer-price growth is also signaling recovery and boosting chances the central bank will cut its benchmark rate, currently at 16.5 percent, for a fourth consecutive month when it meets on July 28. Inflation slowed for a seventh month to 6.9 percent in June.
If all else fails, immortality can always be assured by spectacular error.

John Kenneth Galbraith.
At the Comex silver depositories Monday final figures were: Registered 25.06 Moz, Eligible 125.73 Moz, Total 150.79 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
In under reported news, at the weekend the G-20 agreed in principle to try to boost world trade by reducing trade barriers. The exact opposite to what’s been happening over the last several months as protectionism has been rising mostly against China, and the continuing trade war between the EU and Russia over the American War Party’s botched coup in the Ukraine. Well it all looks good in the press release.
When a man says he approves of something in principle, it means he hasn't the slightest intention of carrying it out in practice.

Count Otto von Bismarck.

G20 ministers reach deal to cut global trade costs

Officials also reaffirm commitment to reduce trade protectionism and set up a new global investment policy
PUBLISHED : Sunday, 10 July, 2016, 11:13pm UPDATED : Sunday, 10 July, 2016, 11:27pm
The Group of 20 will work to trim global trade costs by 15 percentage points as part of a series of deals reached during a weekend meeting of trade ministers in Shanghai.
The ministers also agreed to ratify the World Trade Organisation’s trade facilitation agreement by the end of this year, extended a promise to cut trade protectionism,and agreed to establish a new coordinated global investment policy.
G20 members have agreed to act as role models in ratifying the trade facilitation agreement,” Commerce Minister Gao Hucheng said on Sunday at the end of the two-day meeting.
“The G20 members will push the implementation of the accord as soon as possible, help developing countries build capacity ... for the agreement, and endeavour to cut global trade costs by 15 percentage points.”
He also said some of the G20 members, including Turkey, Brazil, Russia and India, had ratified the accord since China became the G20’s host this year.
Saudi Arabia announced during the Shanghai meeting that it had just completed domestic procedures to ratify the agreement, Gao said.
The accord still needs the support of more than 20 WTO members to reach the two-thirds majority to have it adopted.
The accord contains provisions to expedite the movement, release and clearance of goods, and its roll-out could expand global exports by up to US$1 trillion per year, according to the WTO.
The trade ministers also renewed a commitment to try to cut protectionist measures, extending the promise to the end of 2018.
According to the World Trade Organisation, the average monthly number of new trade-restrictive measures imposed by G20 economies reached a record high in the seven-month period to mid-May, the latest period for which data was available. The figures were the highest since 2009, when the organisation started monitoring the restrictions.

"In economics, hope and faith coexist with great scientific pretension."

John Kenneth Galbraith.

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?

Graphene flexes its muscles in new study

Date: July 7, 2016

Source: Boise State University

Summary: The unique properties of graphene and graphene foam could one day be used to regenerate 3-dimensional tissues and organs for implantation into the human body, new research shows.
A team of researchers from Boise State University, led by Eric Krueger and David Estrada, have published an article in the American Chemical Society's Biomaterials Science and Engineering journal.
Titled "Graphene Foam as a 3-dimensional Platform for Myotube Growth," it focuses on a study demonstrating the suitability of graphene foam as a scaffold for growing functional muscle tissue. Graphene foam is an emerging 3D version of graphene, a layer of carbon so thin it is considered 2-dimensional.
Ultimately, researchers hope that the unique properties of graphene and graphene foam can be used to regenerate 3-dimensional tissues and organs for implantation into the human body. Past studies have confirmed bone and cartilage growth on graphene foam, but this is the first known study of its compatibility with muscle growth.
"Not only did we demonstrate that extra cellular matrix proteins on graphene foam can enhance the differentiation of pluripotent C2C12 myoblasts, but we were able to verify muscle functionality by using the graphene foam itself as an electrode to stimulate the tissue," said Krueger, postdoctoral research associate in the Micron School of Materials Science and Engineering. "You can actually see the movement of the cells and graphene foam as the muscle cells contract."
The extracellular matrix consists of molecules secreted by cells within the connective tissues and organs of the body. Differentiation of pluripotent cells in response to their local environment is an area of intense research effort, and one that can make a significant impact to biomedical research and the treatment of connective tissue diseases through a regenerative medicine approach.
The study was a collaboration between three Boise State Ph.D. programs -- in biomolecular sciences, electrical and computer engineering, and materials science and engineering -- and used resources made available through the Biomolecular Research Center (BRC). The BRC is funded by a NIH Center of Biomedical Research Excellence (COBRE) in matrix biology award.
"This publication demonstrates the progress that can be made through collaboration based on a team approach to scientific research -- this is the best way to accomplish such progress, and precisely the type of multidisciplinary project that the Biomolecular Research Center is established to support," said center director Julia Oxford, a distinguished professor, program director and principal investigator of the COBRE award.

The monthly Coppock Indicators finished June

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

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