Tuesday, 16 August 2016

Tulip Mania.

Baltic Dry Index. 671       Brent Crude 48.08

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

"The Federal Reserve is not currently forecasting a recession."

Ben “Bernocchio” Bernanke, January, 2008.
Stock marketeers have gone all-in on the Fedster’s, and the other central banksters, coming to the aid of the casino party. Everyone and their dog has now bet that quite the opposite from removing the punchbowl, the central banksters are about to bring out more punch bowls, and to spike it by adding moonshine. To me it sounds like “tulip mania” all over again as the central banksters’ “emergency” ZIRP, QE forever, and now NIRP programs, have perverted capitalism and investing, into outright gambling on the next central bank rig in the casino.
The casino is now heavily bet on black thinking that they have the central banksters and the Fed’s talking chair over a barrel. All the signs from the global economy suggest that red is about to turn up. “Our crooked central banksters will tilt the roulette wheel”  say the all-in punters. We are about to find out if they are right. We are still ten days away from the Fed’s talking chair speech at the Jackson Hole junket for cronies.

"The Federal Reserve will not monetize the debt."
Ben “Bernocchio” Bernanke, April 2008.

Japanese Shares Drop as Yen Surges Amid Dollar Slump; Gold Gains

August 16, 2016 — 12:17 AM BST Updated on August 16, 2016 — 4:51 AM BST
Japanese stocks dropped as the yen surged to a one-month high, while gold advanced as a gauge of the greenback’s strength fell to its weakest since June.

The Topix index slid by the most in almost two weeks as the yen led gains among major currencies, eroding the competitiveness of Japanese exporters. U.S. equity index futures declined after the S&P 500 Index ended the last session at a record high. A gauge of the dollar’s strength slid to its weakest since June and gold climbed by the most in two weeks. Nickel retreated following its biggest jump this month.
Global equities are near a one-year year as lackluster data in the world’s biggest economies fuel speculation central banks will support growth with stimulus and loose monetary policy. The probability of the Federal Reserve diverging from its peers and boosting interest rates in 2016 is below 50 percent and that’s weighing on the dollar, which has lost ground versus 15 of 16 major peers in the past month.

Emerging Stocks Head for Longest Rally in 16 Months as Won Gains

August 16, 2016 — 4:08 AM BST Updated on August 16, 2016 — 5:54 AM BST
Emerging-market stocks headed for the longest winning streak since April 2015 and currencies strengthened as oil near a one-month high and optimism that the U.S. will keep borrowing costs low for longer stoked appetite for riskier assets.

The MSCI Emerging Markets Index rose for a ninth day toward the highest level since July 2015 as Indonesia and Malaysia led gains, while a gauge of mainland China companies traded in Hong Kong reached the highest level this year. South Korean shares resumed trading after a holiday, climbing for an eighth day in the longest stretch of advances since 2011. Taiwanese stocks slid, with valuations near a September 2014 high. The South Korean won led a measure of currencies higher.

Developing-nation shares have soared 33 percent from a January low, driving valuations to the highest level in 15 months. A commodities rebound and bets that some of the largest economies will take measures to support growth with stimulus and lower borrowing costs have spurred demand for higher-yielding assets. Overseas investors have plowed almost $6 billion into equities this month in India, Indonesia, the Philippines, South Korea, Taiwan and Thailand, data compiled by Bloomberg show.

“Foreign funds are still flowing into emerging markets because of surplus liquidity in the global financial system,” Koraphat Vorachet, an investment strategist at Capital Nomura Securities Pcl, said by phone from Bangkok. “Still, valuations are probably quite stretched after the recent rally. Investors should be ready to sell some of their investments to lock in profit.”

Investors have trimmed bets that the Federal Reserve will raise interest rates in 2016 after stagnant retail sales data last week revived doubts about the strength of the U.S. recovery.

The MSCI Emerging Markets Index climbed 0.1 percent to 917.14 at 12:42 p.m. in Hong Kong, bringing its nine-day gain to 5.7 percent. As stocks climb, a technical indicator is signaling the rally may be overdone. The MSCI gauge’s 14-day relative strength index was at 77 on Tuesday, the highest since April 2015 and the seventh day above the 70 level that some technical analysts say indicates the measure is set to reverse direction.

Tulip mania

Tulip mania or tulipomania (Dutch names include: tulpenmanie, tulpomanie, tulpenwoede, tulpengekte and bollengekte) was a period in the Dutch Golden Age during which contract prices for bulbs of the recently introduced tulip reached extraordinarily high levels and then suddenly collapsed.[2]

At the peak of tulip mania, in March 1637, some single tulip bulbs sold for more than 10 times the annual income of a skilled craftsman. It is generally considered the first recorded speculative bubble (or economic bubble),[3] although some researchers have noted that the Kipper- und Wipperzeit episode in 1619–22, a Europe-wide chain of debasement of the metal content of coins to fund warfare, featured mania-like similarities to a bubble.[4] The term "tulip mania" is now often used metaphorically to refer to any large economic bubble when asset prices deviate from intrinsic values.[5]

The 1637 event was popularized in 1841 by the book Extraordinary Popular Delusions and the Madness of Crowds, written by British journalist Charles Mackay. According to Mackay, at one point 12 acres (5 ha) of land were offered for a Semper Augustus bulb.[6] Mackay claims that many such investors were ruined by the fall in prices, and Dutch commerce suffered a severe shock. Although Mackay's book is a classic, his account is contested. Many modern scholars feel that the mania was not as extraordinary as Mackay described and argue that not enough price data are available to prove that a tulip bulb bubble actually occurred.[7][8][9]

But did a black swan just fly in to spoil the party? Is unheard of Neuromama Ltd. really bigger than iffy Tesla? Will the NY City Fed team of riggers and fix-its, jump in and buy Neuromama? It makes as much sense as most of their other actions since Lehman crashed all the way back on September 15th, 2008. We are still deep in central bankster “emergency measures” following that epic crash that they never saw coming.
"The U.S. government has a technology, called a printing press (or today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at no cost."
Ben “Bernocchio” Bernanke, November 2002.

A $35 Billion Stock, an SEC Halt and Suspicions of Manipulation

August 15, 2016 — 8:58 PM BST Updated on August 16, 2016 — 1:30 AM BST
Neuromama Ltd. might be the most prominent example, but it’s unlikely to be the only one.

On Monday, the Securities and Exchange Commission halted its shares, which trade on over-the-counter markets in the U.S., over “potentially manipulative transactions” and concerns about the “identity of the persons in control.”

There were red flags over the years. But Neuromama, which has ambitions to license “heavy ion fusion technology patents” among its many projects, began to draw more scrutiny this year after its paper value more than quadrupled to $35 billion on scant volume. Before its suspension, the market cap of Neuromama, which was based in southwest Siberia before moving to a beach community near Tijuana, Mexico, was greater than even Tesla Motors Inc.

How an obscure search engine with no reported financials since 2013 was able to become a multi-billion-dollar company is an all-too-familiar tale in the murky, largely unregulated OTC market. Filled with penny stocks that don’t meet listing requirements of the New York Stock Exchange or the Nasdaq Stock Market, it’s long been a place ripe for exploitation by fraudsters, who manipulate shares of shell companies to make illegal profits through “pump-and-dump” schemes. When it halted Neuromama this week, the SEC cited false statements from the company that it had applied to list on Nasdaq.

“Shell companies have been a problem for decades because the agency has lacked the resources to police them,” said Stephen Crimmins, a former SEC enforcement lawyer who now works for Murphy & McGonigle. “It’s absolutely something that needs attention.”

Even after the SEC’s push to remove more than 800 such companies over the last few years in an operation dubbed “Shell Expel,” hundreds more still trade. Several like Neuromama, have reported little or no sales, yet also have billions in market value.

Judy Burns, an SEC spokeswoman, didn’t immediately respond to a request for comment.

Neuromama’s situation has echoes of a little-known company called Cynk Technology Corp. The Belize-based firm, which had virtually no assets or revenue, briefly surged past $6 billion in market value in 2014 in what U.S. authorities said was a pump-and-dump scheme. The man behind it all, Gregg Mulholland, pleaded guilty to money laundering conspiracy in May.

To read more about the saga of Cynk, click here.

A telephone call seeking comment from Neuromama’s chief executive officer, Igor Weselovsky, Chief Financial Officer Karapet Gevorgyan and Dante Pedroza Mendez, the chief operating officer, went unanswered at the company’s headquarters. Neuromama hasn’t formally been accused of wrongdoing. Its stock doesn’t trade every day, and when it does volume is less than 500 shares a day, meaning few investors are probably affected.

Steven Zubkis, the chief marketer according to the company’s website, has a history of run-ins with the law. Also known as Steven Schwartzbard, he was sentenced in 2007 to five years in prison for defrauding investors in a $1.8 million scheme through misrepresentations tied to the renovation of a Las Vegas casino. The Ukrainian immigrant was sued by the SEC in the 1990s for orchestrating a $12 million penny stock scam. He was ordered to pay more than $21.6 million in disgorgement and penalties.

Zubkis didn’t directly respond to questions about Neuromama’s $35 billion market value or its financials, but said in an e-mail that the high price of its stock and the relative lack of trading made it an easy target for regulators. He also said Neuromama is in an industry with typically high valuations. The shares last traded at $56.25, far above your typical penny stock.

"It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions."

Ben “Bernocchio” Bernanke, October 2007.

At the Comex silver depositories Monday final figures were: Registered 27.48 Moz, Eligible 128.95 Moz, Total 156.43 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, the same old story. Yet more red flags over China and we don’t mean bunting. As always, this time it’s different, until it isn’t.
"With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly."
Ben “Bernocchio” Bernanke, November 2005.

RPT: IMF Warns China Credit Growth Unsustainable, Urges Action

Sunday, August 14, 2016 - 16:30
BEIJING (MNI) - China must take "decisive action" to tackle rising vulnerabilities in its economy, especially the country's systemic corporate debt problem, even if that means slower growth in the short term, the International Monetary Fund said Friday.

In its annual review of the Chinese economy, known as the Article IV consultation, the IMF's board called for China to reduce its reliance on credit-financed, state-led investment and "improve governance, risk pricing and resource allocation in the state-owned enterprise (SOE) and financial sectors."

A report by IMF staff for the consultation went further, describing China's vulnerabilities as "rising on a dangerous trajectory".

While acknowledging significant progress on some aspects of reform and economic rebalancing, IMF staff said China has lagged in critical areas, such as overhauling state-owned enterprises and reining in credit growth.

Mixed messages from the Chinese leadership and a lack of policy clarity are adding to concerns about the country's commitment to reform, with government policy and pronouncements seeming to alternate between prioritizing reform and growth, the IMF staff said.

They called on the government to step up coordination to tackle China's systemic corporate debt problem by forming a high-level group, with a clear mandate for policy formulation, that cuts across government agencies and other parties such as banks. Some high-profile pilot restructurings and liquidations of SOEs should also take place, the IMF staff said.

"A high-level decision is needed to stop financing weak firms, strengthen corporate governance, mitigate social costs and accept the likely lower growth," the IMF said.

"This decision should be reflected in the coordinated action of all public bodies, especially SOEs, local governments and financial supervisors," they added.

On the yuan, the IMF staff said they assess the current level of the currency as "broadly in line with fundamentals". However, they hinted that the Chinese authorities need to recognise the value of allowing market forces to guide the exchange rate "toward equilibrium levels".

Without referring specifically to the turmoil that gripped global markets in August 2015, when the central bank unexpectedly changed the way it calculates the yuan's daily fixing against the dollar, the IMF staff said authorities should ensure that any adjustment to the exchange rate is not destabilizing.

The IMF staff urged China to introduce an explicit medium-term inflation target or range as part of a movement toward a more modern and market-based monetary framework, and to give the People's Bank of China operational independence to manage it.

China's central bank isn't independent and major decisions on interest rates are taken by the government and Communist Party leadership. PBOC Governor Zhou Xiaochuan has said that central bank has four objectives - maintaining low inflation, economic growth, relatively high employment and balanced international payments.

IMF staff said the central bank should also declare the seven-day repo rate its new intermediate policy target for monetary policy purposes. The PBOC should allow longer-term rates to be market determined, reflecting expectations of the PBOC's future policy rates and future inflation among other factors, the staff report added.

----Under a no-reform scenario with limited reform progress and continued reliance on unsustainable policy stimulus, growth could slow to a range of 3% to about 5% by 2021, the IMF projected, while the non-financial private debt to GDP ratio would continue to rise from 158% in 2015 to over 210% by 2021. 

All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.  The vast majority of mortgages, including even subprime mortgages, continue to perform well.  Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable."

Ben “Bernocchio” Bernanke, May 2007. 

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?

Turbo power meets extreme efficiency: Infiniti unveils world's first production engine with variable compression ratios

Loz Blain August 14, 2016
Forget variable length intakes and variable valve timing, Infiniti is going all the way and introducing variable cylinder compression ratios. The new VC-T turbo engine automatically adjusts between a high-powered 8:1 and a hugely efficient 14:1 ratio as you drive.
As environmental protection measures continue to tighten the screws, combustion engine manufacturers are getting more and more creative in their efforts to squeeze more out of gasoline.
Here's a fascinating example: Infiniti is about to unveil the world's first production-ready variable compression ratio engine at this year's Paris Motor Show.
The Infiniti VC-T is a 2.0-liter 4-cylinder turbocharged petrol engine with the ability to raise and lower the stroke of its pistons, giving it a range of available compression ratios from 8:1 all the way up to 14:1.
The engine changes compression ratios depending on how you're driving; when you put your foot down and the turbo starts working hard, forcing a heap of air into the cylinder, the air-fuel mix becomes more likely to pre-detonate. That's why high-performance turbo engines need to run lower compression ratios – the Subaru WRX, for example, runs the same 8:1 ratio that the VC-T can at peak performance.

But when you're cruising, that's unnecessary and inefficient – you get significantly better fuel economy from a higher compression engine.

The VC-T engine constantly changes its ratio to give you high performance when you ask for it, and excellent economy when you don't. It does this using an actuator arm that changes the angle of a multi-link that sits around the crankshaft, raising and lowering the top and bottom points of the piston stroke without moving the crankshaft or the cylinder head.

There have been other variable compression ratio engines built, just none for production. Peugeot, for example, used a system that changed the length of the conrods to achieve a similar result. Porsche has recently patented a design that puts the small end bearing in an eccentric adjuster to make the same kinds of adjustments.

Infiniti won't be releasing solid figures on the VC-T engine's performance until Paris at the end of September. But it should deliver more than the current QX60 3.5-liter V6, which makes some 265 horsepower and 248 foot-pounds, with about a 27 percent boost in fuel efficiency. And the company claims the weight penalty won't kill the idea, as the engine will only be around 22 lbs heavier than a typical inline four of the same capacity.

----On the other end of the scale sit electric motors, which are simple, massively powerful and quiet. They don't need valves or injectors or clutches. They're so flexible they don't even need gearboxes much of the time. They deliver full torque from a standstill, with nothing like the bizarre power curves you need to deal with on a combustion engine. And of course they're incredibly efficient, generating far less waste heat and converting a vastly higher percentage of your fuel energy into motion.
But until batteries can offer all-day driving range or quick enough charging to make recharge stops practical (and do it all at a competitive price) we'll be stuck here marveling at the ingenuity of combustion engineers trying to wring every last drop out of last century's technology.

The monthly Coppock Indicators finished July

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

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