Monday, 15 August 2016

More Pixie Dust Needed Urgently.

Baltic Dry Index. 671 +18     Brent Crude 47.23

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

“All the world is made of faith, and trust, and pixie dust.”

Janet Yellen, with apologies to J. M. Barrie and Peter Pan.

We open with Asia today, where the “all news is good news” euphoria still rules. Despite bad economic news from Japan and iffy economic news from China, stock market gamblers everywhere are betting that the bad news will force the central banksters’ fairy godmother back into action, waving their magic wand and sprinkling Pixie Dust all around, fixing everything in sight.

This old dinosaur has seen this movie before, and would use the illogical stock market highs to take profits, exit stocks, and with cash increasingly “paying” a negative interest rate, park the proceeds in fully paid up gold and silver bullion, and take an interest in gold and silver mining stocks. No matter how many times I’ve watched this movie before, it always has the same sad ending. Greed gets its comeuppance from fear.  But this time it’s different, of course.

“Dreams do come true, if only we wish hard enough. You can have anything in life if you will sacrifice everything else for it.”

Haruhiko Kuroda, with apologies to J. M. Barrie and Peter Pan.

Asian Stocks Near One-Year High as Crude Oil Rises With Nickel

August 15, 2016 — 12:08 AM BST Updated on August 15, 2016 — 5:37 AM BST
Asian shares held near a one-year high and U.S. equity index futures advanced as rising oil prices supported sentiment following disappointing data in the world’s three largest economies.

The Topix index fell and the yen fluctuated after Japan announced slower economic growth than analysts forecast. The Shanghai Composite Index jumped by the most since May as speculation takeover activity will pick up outweighed Chinese figures showing a slump in new lending. The yuan weakened by the most in a month and Chinese government bonds rose. U.S. crude climbed for a third day, while nickel rebounded following its biggest one-day loss since July.

Global equities are holding near a one-year high as evidence of uneven growth in the world’s biggest economies both unnerves traders and fuels optimism that central banks will come to the rescue by way of stimulus. The probability that the Federal Reserve will increase interest rates this year eased to 42 percent in the futures market on Friday, from 49 percent a day earlier, after reports showed U.S. retail sales stopped expanding in July and wholesale prices unexpectedly fell.

Japan's economy stalls in April-June, casts doubts on Abe's policies

Sun Aug 14, 2016 10:07pm EDT
Japan's economic growth ground to a halt in April-June after a stellar expansion in the previous quarter on weak exports and capital expenditure, putting even more pressure on premier Shinzo Abe to come up with policies that produce more sustainable growth.

The world's third-largest economy expanded by an annualized 0.2 percent in the second quarter, less than a median market forecast for a 0.7 percent increase and a marked slowdown from a revised 2.0 percent increase in January-March, Cabinet Office data showed on Monday.

The weak reading underscores the challenges policymakers face in putting a sustained end to two decades of deflation with the initial boost from Abe's stimulus programs, dubbed "Abenomics," fading.

"Overall it looks like the economy is stagnating. Consumer spending is weak, and the reason is low wage gains. There is a lot of uncertainty about overseas economies, and this is holding back capital expenditure," said Norio Miyagawa, senior economist at Mizuho Securities.

"The government has already announced a big stimulus package, so the next question is how the Bank of Japan will respond after its comprehensive policy review, which is sure to lead to a delay in its price target."

On a quarter-on-quarter basis, gross domestic product marked flat growth in April-June, weaker than a median market forecast for a 0.2 percent rise.

Private consumption, which accounts for roughly 60 percent of GDP, rose 0.2 percent in April-June, matching a median market forecast but slowing from a 0.7 percent increase in the previous quarter.

Capital expenditure declined 0.4 percent in April-June after a 0.7 percent drop in the first quarter, the data showed, suggesting that uncertainty over the global economic outlook and weak domestic markets are keeping firms from boosting spending.

Overseas demand shaved 0.3 percentage point off GDP, subtracting from growth for the first time in four quarters, underscoring the pain sluggish global growth is inflicting on the export-reliant economy.

Kuroda Price Vexation Means Less Misery at Tokyo Ramen Shops

August 14, 2016 — 4:01 PM BST Updated on August 15, 2016 — 2:03 AM BST
It’s 37.7 degrees at noon in Tokyo on the hottest day of the year and still the square outside Shimbashi Station is teeming with office workers scampering to find a cheap lunch.

The neighborhood is littered with restaurants offering sushi, ramen noodles or beef bowls for about $5. That’s a godsend in a country where real wages have shrunk every year since Prime Minister Shinzo Abe took office in 2012 on a pledge to revitalize the economy.

The scene highlights a dilemma for Abe and Bank of Japan Governor Haruhiko Kuroda, who has spent three years undertaking unprecedented monetary easing to stoke inflation toward 2 percent. While the policy succeeded in sending bond and stock prices higher, those seeking a meal around Shimbashi station are still more concerned about being frugal with their salaries than making big purchases before prices rise.

“I’m against the reflationary policies of the government and BOJ,” said Shoichi Sasaki, a 37-year-old father-of-two breaking for lunch in Shimbashi. He has less money to spend after his wife cut his allowance by almost a third, saying they need to save more for education and daily expenses. “In my situation, it helps if prices go down.”

Sentiments like that are reflected in the Misery Index, computed by adding inflation to the unemployment rate. At 2.7 percentage points in June, the gauge hasn’t been lower since 1995. Consumer prices have been falling along with joblessness, but tightness in the labor market has yet to flow through to higher salaries. The Misery Index shot to 7.3 percentage points in 2014, the highest since 1981, after Abe oversaw a sales-tax hike to 8 percent from 5 percent that sent the country into recession.

In other Asia news, China continues to talk up a storm about reducing malinvestment excess capacity. Achieving anything meaningful is less easy.

China to use tougher environmental standards to tackle capacity glut

Fri Aug 12, 2016 11:23pm EDT
China will use the stricter enforcement of environmental, safety and energy efficiency standards as well as tougher credit controls to help fight against overcapacity in key industrial sectors, the government said.

The world's second-largest economy has identified overcapacity as one of its key challenges and it has already pledged mass closures in the steel and coal sectors, but it has so far fallen behind on its targets.

The Ministry of Industry and Information said on Friday in a draft policy document published on its website ( it would "normalize the stricter implementation and enforcement of mandatory standards" to tackle overcapacity in sectors such as steel, coal, cement, glassmaking and aluminum.

It would implement a "differential credit" policy that would allow lenders to extend loans to help firms restructure while cutting off funding for poorly performing enterprises targeted for closure.

Firms that fail to comply with new energy efficiency targets would be given six months to rectify and would be closed if they fail to make progress. Those that continue to exceed air and water pollution standards would be fined on a daily basis and in serious cases ordered to shut.

It said authorities would cut off power and water supplies, and even demolish the equipment of firms that fail to meet environmental and safety standards. Facilities could also be sealed off to prevent them from going back into operation.

China to use carbon scheme to boost electric car numbers: draft rules

Fri Aug 12, 2016 4:51am EDT
China, the world's biggest auto producer, plans to include carmakers in its planned national carbon trading scheme to encourage the manufacture of more electric vehicles, according to a draft of rules being circulated in the industry.

Domestic makers and importers of fossil-fuel cars will have to participate in the scheme if they meet a minimum production or sales threshold, according to rules drawn up by the National Development & Reform Commission (NDRC) and posted on a local news website on Thursday.

There are no details yet on where the threshold will be set, but the document also said some makers of new energy vehicles (NEVs) - plug-in electric and hybrid cars - would be able to participate in the scheme.

The draft will also circulate within regulatory bodies including the Ministry of Industry and Information Technology, which oversees manufacturing industries, until Aug. 25 for consultation, an official with the NDRC confirmed to Reuters.

It was not clear how much longer the review process will run after that or when the program might be implemented.

The policy would likely benefit China's top NEV producers such as BYD Co and BAIC Motor Corp, which have stepped up production of traditional hybrids in recent years.

China central bank: yuan's global acceptance to be driven by market

Sun Aug 14, 2016 11:40pm EDT
The internationalization of the yuan has exceeded people's expectations and its global acceptance will be driven by market forces, Yi Gang, a China central bank vice governor, said on Monday.

China will continue to reform its bond market as major international institutions look to issue debt denominated in special drawing rights (SDRs), Yi also told a news conference.

“The moment you doubt whether you can fly, you cease for ever to be able to do it.”

Mario Draghi, with apologies to J. M. Barrie and Peter Pan.

At the Comex silver depositories Friday final figures were: Registered 27.48 Moz, Eligible 128.55 Moz, Total 156.03 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, German madness. Life in the worker’s paradise of Germany under migrant mad Mrs Merkel. Now Merkel wants German employers to hire untrained, non-German speaking, moslem migrants. To do what? And at what rate of pay? And if hired, what happens to un-hired German workers?  GB must exit this insane German run EUSSR ASAP, before the next economic crisis hits or revolution breaks out.

Merkel to urge chiefs of big companies to hire refugees, Bild reports

Aug 13, 2016 7:27am EDT
Chancellor Angela Merkel has invited executives from some of Germany's biggest listed companies to attend a summit next month where she will urge them to hire more refugees, the newspaper Bild reported on Saturday.

More than one million migrants flooded into Germany last year, and the government wants to get as many as possible into the job market, which would reduce their dependence on the state and compensate for labor shortages as the workforce ages.

Merkel will push reluctant German companies to offer more traineeships and position to refugees, Bild reported. Large companies have been criticized for doing little to help integrate the refugees into the thriving job market.

Companies say most of the new arrivals lack the German language skills and the education required for a job.

Engineering giant Siemens (SIEGn.DE), chemicals group Evonik (EVKn.DE), carmakers Opel(GM.N) and VW(VOWG_p.DE) and utility RWE(RWEG.DE) will share with Merkel the results of pilot projects with refugees, Bild said.

Merkel's office declined to confirm Bild's report, which said the meeting at the chancellery will take place Sept. 14.

The Frankfurter Allgemeine Zeitung reported a month ago that the 30 biggest DAX-listed companies had until June employed only 54 refugees, including 50 who were hired by logistics provider Deutsche Post DPWG.DE.

German President Booed, Attacked; Claims "The People Are The Problem, Not The Elites"

Aug 13, 2016 10:08 PM
Revolution is closer than you think...

Following Angela Merkel's earlier calls for German CEOs to hire refugees, and as Martin Armstrong notes, Germany has raided its healthcare funds to support the refugee crisis...

The government passed a law that allows them to take 1.5 billion euros from the liquidity reserve of the public health care fund (10 billion euros in total, paid by all members and additionally by the taxpayer) and to give that money to refugees / asylum seekers.

What would you call this? Insane?

We thought a reminder of the tensions that are bubbling under the surface in Germany.  

As VoxDay noted appropriately, Germany's elite is going to get a well-deserved one soon as German President Joachim Gauck was booed and attacked in the streets of Sebnitz, Saxony after he blurted out the following unbelievbable statement:

“The elites are not the problem, the people are the problem.”

“Oh, the cleverness of me!”

The “Hammer of the Germans,” Mrs Merkel, with apologies to J. M. Barrie and Peter Pan.

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?

Blockchain-Based Peer-To-Peer Solar Energy Trading To Be Trialed In Perth

August 13th, 2016 by Guest Contributor
A Perth start-up is set to begin trials of its blockchain-based software program that, if successful, could mean the beginning of peer-to-peer energy trading in Australia, in which consumers buy, sell or swap excess solar electricity directly with each other, rather than to the grid for a minimal return.

The company, Power Ledger, will begin the trials later this month, which will be conducted in conjunction with National Lifestyle Villages. The eight week trial will involve 10 households and about 20 people at NLV’s Busselton Lifestyle Village, on the Western Power network.

Jemma Green – Power Ledger’s chair, who co-founded the company with Dave Martin and Jenny Conroy – says the aim of the pilot project is to enable producers and consumers to trade their energy directly, saving money, hassle and maximising the use of rooftop solar.

Blockchain is the software that underpins bitcoin, the virtual currency that has proved popular in many markets. Blockchain is now being seen as a revolutionary new step in many other markets, including in energy.

The technology works, like bitcoin, to identify the ownership of energy as it is generated and then to manage multiple trading agreements between consumers who buy excess solar direct from the original owner/producer, without the addition of market costs and commercial margins.

“It’s a software program that tracks the movement of electricity from point to point,” Green explained in an interview with One Step Off The Grid on Friday. “It handles the financial transactions off the back of it as well.

“Presently, if you’ve got surplus solar electricity you sell it back for a low feed-in tariff and buy it back (from the grid) for a high rate. Using (Power Ledger), you can sell it to your neighbour at somewhere between the two” – less than the uniform tariff but more than you would get from selling it to their retailer, Green said.

For example, rather than exporting excess solar to the grid for 6-7c/kWh and then buying electricity at a rate of 23c/kWh, you can sell it for 15c/kWh, which is around 10c/kWH after grid access costs are paid to the retailer.

“Effectively, we’re cutting out the middle-man to save consumers, and to maximise returns for producers,” she said.

“It’s a win for the people who have been able to afford to invest in roof-top solar, but also a win for customers who haven’t: they will be able to access clean, renewable energy at effectively a ‘wholesale’ rate. Everyone wins.

And in saying that, Green also means the incumbent power industry – as much as this disruptive technology might seem to be cutting their lunch.

Green says network operators in both WA and Victoria have been receptive to trialling the blockchain technology, and WA retailer Synergy is said to be “supportively involved” in discussions on a 2017 trial in the Perth metro area.

“There need to be new commercial models given the use of centralised energy is declining – and battery storage is likely to exacerbate that.”

Green says energy industry incumbents have a window of about two years – the time she and many others estimate it will take before battery storage becomes economic for the majority of Australian households – to sort out their future business models.

“If you see the grid as a trading platform instead of just poles and wires, then you can start to thing about how can consumers be a positive part of that.

“There are quite significant opportunities in this paradigm.

“If you can enable people with solar to sell power to each other, they’ll be sending it across the grid (rather than storing it in batteries) which will maintain the use of the grid – and therefore the value of it,” Green said.

For retailers, she adds, it will be about building relationships with the consumers to facilitate the trading.

“For example, within a strata building you might have the strata own 49 per cent of the solar and battery system, while 51 per cent is owned by the retailer who also provides differential power.”

Green also believes the Power Ledger platform could boost solar uptake, prompting installations that might not have happened before.

“For example,” she told One Step, “you might have a local govt authority that has demand in one area and no roof space for solar.” In situations like this, she says, they could install a solar array in one spot and transfer the electricity generated to where it is needed.

“Consumers don’t like selling their power back to the retailer and buying it back at a higher price.
Using this platform, Green adds, “they can gift the electricity to their mother or anyone else; sell it when they want at the price they want.
“The benefits of distributed renewable energy will flow on to those who, at the moment, can least afford to participate; we think that’s pretty special.”
The Busselton trial will run for eight weeks, after which time Greens says Power Ledger will be announcing another trial in Perth’s south west. The company is also working on securing sites for a trial on the NEM in Victoria, and hopes to enter into commercial trials of the technology in 2017.
“We see this very much as a global product; a product of global significance. So it’s exciting to me that it’s happening (first) in Perth,” Green said, noting that WA was shaping up to be a leader in adoption of new energy technologies.
“They’re really aware of the declining utilisation of the grid and the economic importance of innovating.” 

The monthly Coppock Indicators finished July

DJIA: 18432  +03 Up NASDAQ:  5162 +10 Up. SP500: 2173 +01 Up.

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