Wednesday, 31 August 2016

Politics 21st Century Style.

Baltic Dry Index. 715  -05      Brent Crude 48.42

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

It is enough that the people know there was an election. The people who cast the votes decide nothing. The people who count the votes decide everything.

President Putin, attributed by Hillary Clinton, with apologies to Uncle Jo Stalin.

We open with a warning from the past about stocks in September. Statistically, US stocks usually slide in September, a record stretching all the way back to the 1890s. A weak September often sets up the crash of October, although in a US Presidential election year everyone expects the Fedster’s, New York City Plunge Protection Team of fixers and rig-its, to work overtime to prevent an October stock market crash ahead of the early November election. 

But this year, according to the Democrats, the US media, the BBC, and the Hillary Huffington Post, everyone from President Putin down to that eight year old computer nerd who lives round the corner, has hacked into all American computers of any importance, together with the voting machines Americans use to vote, so we can expect an October full of devastating black swan surprises, and a landslide win for Putin’s Manchurian Candidate, Donald Trump. No really, this is what passes for adult American politics in the 21st century.

We are 90+ months in to our QE, ZIRP and NIRP virtual non-recovery, meaning this “recovery” is already long in the tooth and about to enter the next recession, but why worry about economic reality when our mass media has Russian phantoms to chase down.

Opinion: September is the worst month for U.S. stocks, and no one knows why

Published: Aug 30, 2016 8:34 a.m. ET

The Dow has fallen by an average of 1.1% since the late 1890s

CHAPEL HILL, N.C. (MarketWatch) — September is an awful month for the U.S. stock market, regardless of how you slice and dice the data.

Since the Dow Jones Industrial Average was created in the late 1890s, September has produced an average loss of 1.1%. The 11 other months of the calendar, in contrast, have produced an average gain of 0.8%.

Furthermore, September’s awful record can’t be traced to just one or two terrible years. On the contrary, the month has an impressively consistent record at or near the bottom of the rankings.

In fact, as you can see from the accompanying chart, September was a below-average performer in all but one of the dozen decades since the late 1800s. And in more than half of those decades, it was in 11th or 12th place in a ranking of monthly average performance.

----(These are the most popular hypotheses: 1. Investors are more prone to sell stocks when they return from summer vacation; 2. Many mutual funds have fiscal years that end Sept. 30, leading them to engage in “window-dressing” during the month; and 3. Investors are forced to sell equities in September to pay the sky-high tuition bills they’ve just received from their kids’ private schools and colleges.)

In other news, Apple gets an unexpected nasty tax bill. Ireland gets a windfall it doesn’t want, but would allow it to repay its UK bailout loan. The EUSSR declares open season on mostly giant trans-Atlantic tax cheats. A drop in new oil field discoveries, suggest big trouble ahead next decade. Everyone is betting on a Yuan devaluation after the G-20 meeting and before the Yuan joins the IMF’s basket of currencies next year.

Next week’s G-20 Great Leader’s summit in China gets frostier by the day.

EU’s Vestager: We can win any Apple appeal

Published: Aug 30, 2016 2:09 p.m. ET

EU attracts sharp criticism from White House, Treasury after Apple ruling

Apple and Ireland were Tuesday quick to announce plans to appeal the European Commission’s $14.5 billion tax ruling against the tech giant, but they shouldn’t forget who they are up against.

Margrethe Vestager, the EU’s hard-hitting competition commissioner, also known as “the Iron Lady of Denmark” for taking on corporate giants in antitrust cases, is determined in upholding the state-aid decision on Apple AAPL, -0.77% remaining confident the case can stand up to any appeal.

“We have of course structured the case in a way that it’ll be upheld if it goes to court. That’s why it sometimes takes a long time to finish these investigations,” she said in an interview with MarketWatch.

 “This probe has been three years under way to make sure we really have a solid case, which I firmly believe we do,” she added.

The EU commission ruled on Tuesday that Apple’s tax arrangement with Ireland constituted illegal state-aid, ordering the Irish government to recover as much as €13 billion in taxes from the iPhone maker. The decision prompted criticism from many corners, with critics arguing the ruling will make Europe less attractive for foreign investment and that Apple hadn’t done anything wrong.

----Similarly, Irish finance minister Michael Noonan said he “profoundly” disagrees with the commission, stressing it’s “important that we send a strong message that Ireland remains an attractive and stable location of choice for long-term substantive investment.”

Even the U.S. Treasury and White House got involved. A spokesperson said the Treasury was “disappointed” with the EU’s decision and that it could threaten “the important spirit of economic partnership between the U.S. and the EU.”

But Vestager was unfazed.

“If that’s how the Treasury feels, then that’s their experience and we can’t take that away from them. All I can say is that we didn’t open this case to upset you,” she said. “ We did it to make sure we have fair competition on Europe.”

The EU’s antitrust investigation concluded that almost all Apple profits recorded by the company’s Irish incorporated entities were internally transferred to a so-called head office that existed only on paper. That arrangement allowed Apple to effectively only pay 1% in taxes on its European profits in 2003 and as little as 0.005% in 2014, way below Ireland’s corporate tax rate of 12.5%.

“Ireland already has a very attractive corporate tax regime compared to other European countries, so it’s hard for me to understand that it’s fair to allow individual companies to receive state aid in the form of lower taxes,” Vestager said.

Apple’s Irish tax deal also meant the company avoided taxation on almost all profits from sales of its products in the EU single market, as the sales were recorded in Ireland rather than in the country where the transaction took place. That structure doesn’t fall under the state-aid oversight, but Vestager hopes this case will prompt EU member states to revisit their own tax rules and review how they treated Apple.

If a country finds Apple should have paid taxes where their products were sold, they can now recover it under Tuesday’s ruling. This would be subtracted from the up to €13 billion to be recovered from Ireland.

But Vestager isn’t done in her sweeping inquiry into sweetheart tax deals in the EU. In Tuesday’s press conference she reminded that the commission is still investigating Inc. AMZN, -0.48% and McDonald’s Corp. MCD, +0.73% for their tax agreements with Luxembourg.

Oil Discoveries at 70-Year Low Signal Supply Shortfall Ahead

August 30, 2016 — 12:00 AM BST Updated on August 30, 2016 — 2:17 PM BST
Explorers in 2015 discovered only about a tenth as much oil as they have annually on average since 1960. This year, they’ll probably find even less, spurring new fears about their ability to meet future demand.

With oil prices down by more than half since the price collapse two years ago, drillers have cut their exploration budgets to the bone. The result: Just 2.7 billion barrels of new supply was discovered in 2015, the smallest amount since 1947, according to figures from Edinburgh-based consulting firm Wood Mackenzie Ltd. This year, drillers found just 736 million barrels of conventional crude as of the end of last month.

That’s a concern for the industry at a time when the U.S. Energy Information Administration estimates that global oil demand will grow from 94.8 million barrels a day this year to 105.3 million barrels in 2026. While the U.S. shale boom could potentially make up the difference, prices locked in below $50 a barrel have undercut any substantial growth there.

New discoveries from conventional drilling, meanwhile, are “at rock bottom,” said Nils-Henrik Bjurstroem, a senior project manager at Oslo-based consultants Rystad Energy AS. “There will definitely be a strong impact on oil and gas supply, and especially oil.”

Global inventories have been buoyed by full-throttle output from Russia and OPEC, which have flooded the world with oil despite depressed prices as they defend market share. But years of under-investment will be felt as soon as 2025, Bjurstroem said. Producers will replace little more than one in 20 of the barrels consumed this year, he said.

Yuan Bears Emerge From Hibernation as Fed Imperils G-20 Calm

August 29, 2016 — 5:00 PM BST Updated on August 30, 2016 — 10:23 AM BST
The yuan’s recent stability may be coming to an end.
Derivative markets are pointing to renewed bets on yuan depreciation, with a three-month measure of expected price swings poised for the biggest monthly increase since January. Other indicators, such as the premium on options to sell the yuan over those to buy and the discount of forward contracts over the spot rate, have also climbed, indicating rising expectations for declines.
The increased pessimism comes after a period of calm that sent the measures to the lowest in at least nine months as the Federal Reserve held off on raising interest rates and investors bet that China would steady the yuan before it hosts a Group of 20 meeting in September. Traders are probing the People’s Bank of China’s willingness to allow the yuan to fall between the G-20 gathering and the currency’s entry into the International Monetary Fund’s Special Drawing Rights on Oct. 1, especially with the chances of Fed action increasing.
"After G-20 ends next Monday, the market may want to test how much yuan depreciation the PBOC can tolerate," said Gao Qi, a strategist at Scotiabank in Singapore. "China doesn’t want the yuan to move too much during G-20 and become a topic of discussion. SDR’s impact will be smaller than G-20."
Some weakness in the yuan wouldn’t be negative for China, which is trying to invigorate an economy growing at the slowest pace in more than 20 years. Data on exports, industrial production and retail sales all fell short of economists’ estimates in July. The median forecast in a Bloomberg survey is for the yuan to decline 1.1 percent the rest of this year.
The dollar rallied the most since June on Friday after Fed Chair Janet Yellen said the case for raising U.S. borrowing costs is getting stronger and Fed Vice Chairman Stanley Fischer indicated an increase in September is possible. Fed funds futures are now pricing in a 36 percent chance of tightening next month, and 61 percent for an increase by year-end.

Ideas are more powerful than guns. We would not let our enemies have guns, why should we let them have ideas.

President Putin, attributed by Hillary Clinton, with apologies to Uncle Jo Stalin.

At the Comex silver depositories Tuesday final figures were: Registered 26.07 Moz, Eligible 136.12 Moz, Total 162.19 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today poor Massachusetts. In winter it’s cold, and dark, and snowy. Now they are thinking of changing time zones, although that might be a little hard to live with if Maine and New Hampshire don’t switch at the same time. An alternative Canadian solution is just to all go down to Florida for the winter, but kind of “how ya going to keep ’em down on the farm,” some of them might not ever come back, after they’ve seen Florida’s “Paree.”
“You look out the window and it shoots your day,” says Sahil Bhaiwala, 21, a Boston University mathematics and economy major headed into his senior year. “All you feel like doing is going home, making dinner and going to bed.”

Massachusetts Could Swap Time Zones for Later Winter Sunsets

August 29, 2016 — 10:00 AM BST
Of all the major cities on America’s eastern seaboard, none is as far north or east as Boston. Which creates a slight problem in winter: The sun sets really early. As in, for most of December, well before happy hour.
The state, it appears, might do something about that. Governor Charles Baker recently signed a bill ordering a study of the wisdom of moving its 10,555 square miles into a time zone that would brighten the end of the day in the months the Northern Hemisphere tilts away from the sun. The idea came from Quincy resident Tom Emswiler, who worries Massachusetts is losing college grads to sunnier climes. On Dec. 9 last year, the sun went down in Boston at 4:11 p.m., only 22 minutes later than in the Yukon.
There is indeed dissatisfaction among young people with a city that can go dark about three hours after lunch. “You look out the window and it shoots your day,” says Sahil Bhaiwala, 21, a Boston University mathematics and economy major headed into his senior year. “All you feel like doing is going home, making dinner and going to bed.”
To keep the likes of Bhaiwala from running off to Silicon Valley, Emswiler says, Massachusetts should throw in with those who live in the Atlantic Time Zone, which covers eastern Canada, the Caribbean and parts of South America, and do away with changing the clocks in spring and summer. From November through March, the sun would set an hour later than it does now, and those brutish winter days would lose some of their sting.
The sun would rise an hour later too, but the thinking is that darkness in the morning is less depressing than darkness at the end of the day.

Emswiler, a 36-year-old health-care administrator, first suggested the time-zone switch two years ago in a Boston Globe op-ed, to which he says reader feedback was voluminous and enthusiastic. His piece outlined the physiological costs of going on and off daylight saving time -- medical research has pointed to more heart attacks in the three days following clocks being moved forward in spring -- and argued sticking to one time would be economically and psychologically beneficial.

In making his case, he also cited a 2013 Boston Federal Reserve study that showed New England had the lowest retention rate of college graduates than all other parts of the country, with only about 63 percent of the class of 2008 still in Massachusetts a year after earning diplomas.

----Of course, as Emswiler acknowledges, people may quit Massachusetts for any number of reasons, everything from the high cost of living in Boston to the other difficulty with winter, which involves often large amounts of snow and wind-chill factors.
The legislative commission that will probe the matter was established as part of an economic development measure, and must report its findings by next July. Time changes have been under discussion in other states, though none have recently taken the step. California’s legislature actually studied for a while a bill that would have effectively accomplished the opposite of what Massachusetts is considering: The proposal to quit daylight saving time would have brought darkness earlier in the evening during much of the year. California, it should be noted, has less of a sunshine shortage issue to worry about than Massachusetts.

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?

The Price of Solar Is Declining to Unprecedented Lows

Despite already low costs, the installed price of solar fell by 5 to 12 percent in 2015
By Robert Fares on August 27, 2016
The installed price of solar energy has declined significantly in recent years as policy and market forces have driven more and more solar installations.

Now, the latest data show that the continued decrease in solar prices is unlikely to slow down anytime soon, with total installed prices dropping by 5 percent for rooftop residential systems, and 12 percent for larger utility-scale solar farms. With solar already achieving record-low prices, the cost decline observed in 2015 indicates that the coming years will likely see utility-scale solar become cost competitive with conventional forms of electricity generation.

A full analysis of the ongoing decline in solar prices can be found in two separate Lawrence Berkeley National Laboratory Reports: Tracking the Sun IX focuses on installed pricing trends in the distributed rooftop solar market while Utility-Scale Solar 2015 focuses on large-scale solar farms that sell bulk power to the grid.

Put together, the reports show that all categories of solar have seen significantly declining costs since 2010. Furthermore, larger solar installations consistently beat out their smaller counterparts when it comes to the installed cost per rated Watt of solar generating capacity (or $/WDC).

The installed cost includes everything needed to get a solar power system up and running: the panels, the power electronics, the mounting hardware, and the installation itself. The continued decline in total installed cost is noteworthy considering the fact that the price of the solar panels (or modules) themselves has remained relatively flat since 2012. This means that the decline in installed cost observed since 2012 was largely caused by a decline in the cost of the inverters that convert the DC power produced by solar panels to AC power for the grid and other “soft” costs such as customer acquisition, system design, installation, and permitting.

---- Perhaps the most interesting piece of data to come out in the latest Lawrence Berkeley National Lab reports is the trend in the price of solar power purchase agreements or PPAs. These prices reflect the price paid for long-term contracts for the bulk purchase of solar electricity. The latest data show that the 2015 solar PPA price fell below $50 per megawatt-hour (or 5 cents per kilowatt-hour) in 4 of the 5 regions analyzed. In the power industry, the rule of thumb for the average market price of electricity is about $30 to $40 per megawatt-hour—so solar is poised to match the price of conventional power generation if prices continue to decline.

Everyone imposes his own system as far as his army can reach.

President Putin, attributed by Hillary Clinton, with apologies to Uncle Jo Stalin.

The monthly Coppock Indicators finished July

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

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