Tuesday, 20 September 2016

The Coin Toss.

Baltic Dry Index. 836 +36    Brent Crude 45.81

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

You've gotta ask yourself one question: "Do I feel lucky?" Well, do ya, punk?

The Fed’s talking chair, with apologies to Dirty Harry.
We open today in Asia, where the gambling banksters and great vampire squids await interest rate action, or inaction, by the Fed and the Bank of Japan.  In the real word, South Korea tackles sorting out the Hanjin Shipping bankruptcy, while China takes on restructuring Bohai Steel. Nothing in the real world support the central banksters’ latest stock and bond bubbles. We long ago left behind voodoo economics.
"With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people."

F. A. von Hayek

Asian markets pause ahead of BOJ, Fed decisions

Published: Sept 19, 2016 11:07 p.m. ET
Asian share-trading stayed tentative Tuesday as investors awaited policy decisions from the U.S. Federal Reserve and the Bank of Japan.

Markets reflected the uncertain balance between risks and rewards heading into this week’s central bank meetings, said Ric Spooner, chief market analyst at CMC Markets.

Japan’s Nikkei Stock Average NIK, -0.23%   was up 0.4% as bank stocks bounced back from recent losses due to speculation that the BOJ would cut its interest rate on excess reserves further into negative territory. Mitsubishi UFJ Financial Group Inc. 8306, +0.92%   was up 0.9%, Sumitomo Mitsui Financial Group Inc. 8316, +0.91%   was up 0.8%, and Resona Holdings Inc. 8308, +0.85%   was up 0.8%.

Australia’s S&P/ASX 200 XJO, -0.21%   fell 0.1%. A technical problem delayed the opening of Australia’s main equities market Monday by about 90 minutes. The ASX said it will provide a detailed incident report on the matter later this week. BHP Billiton Ltd. BHP, +1.81%   was up 1.8% with Rio Tinto Ltd. RIO, +1.01%   higher by 1%.

Australia’s central bank indicated Tuesday it would keep interest rates on hold, possibly until next year, to support growth. Interest rate-sensitive sectors of the economy, such as housing construction, are being helped by record low rates, while the economy is growing strongly, the Reserve Bank of Australia said in the minutes of its Sept. 6 board meeting released Tuesday.

Hong Kong’s Hang Seng Index HSI, -0.21%   and the Shanghai Composite SHCOMP, -0.07%   were both down about 0.1%. South Korea’s Kospi SEU, +0.16%   was unchanged.

Trading volumes were largely expected to stay low as traders awaited the BOJ’s policy decision Wednesday, analysts said. The U.S. Fed announces its decision in the early hours Thursday, Asia time.

All Hanjin Shipping chartered vessels to be returned to owners after unloading: judge

Mon Sep 19, 2016 | 2:31am EDT
All Hanjin Shipping Co Ltd (117930.KS) chartered vessels that have completed unloading their cargo have been told to cancel their charter agreements and return the ships to the shipowners, a South Korean judge said on Monday.

Hanjin, the world's seventh-largest container line, filed for receivership last month, leaving more than 100 ships and their cargo at sea and threatening to snarl U.S. freight traffic as the year-end shopping season approaches.

Dozens of Hanjin's ships have been blocked from docking with ports and lashing firms fearing they won't be paid. Some vessels have also been seized and some sold.

The company had a total of 141 vessels, including 97 container ships as of early September. Out of the 97 container ships, 60 were chartered and 37 owned by Hanjin.

The company returned three bulk carriers earlier this month, a Hanjin Shipping spokeswoman said on Monday.

In addition, four container ships have been returned to the shipowners as of Sunday, while Hanjin has received shipowners' notifications to return 13 more container ships, another Hanjin spokeswoman said.

Current delays in unloading cargo are incurring more than $2 million in charter fees daily, the judge in charge of liaising with media at Seoul Central District Court also told Reuters in a text message.

Last week, Hanjin secured $45 million from its chairman and a former chairwoman to help unload an estimated $14 billion in cargo trapped on its ships but needs more money to pay port and trucking fees.
Korean Air Lines Co Ltd (003490.KS), the top shareholder of Hanjin Shipping, has been considering lending the shipper 60 billion won ($53.70 million) but the plan has run into resistance.

---- South Korea has said no government or central bank money would be directly injected into the firms restructuring in the ailing shipping and shipbuilding industries, though it is helping small-to-medium sized businesses hit by the restructuring.

China draws up restructuring plans for Bohai Steel - Caixin

Sun Sep 18, 2016 | 9:18pm EDT
Financial authorities in the city of Tianjin plan to convert a portion of debt-stricken Bohai Steel Group's liabilities into bonds, according to rescue plans drawn up recently, the online financial magazine Caixin reported on Monday.
Officials met on Sept. 11 to discuss a comprehensive restructuring plan for the firm, which has liabilities of 192 billion yuan ($28.78 billion) from 105 creditors.
According to the plan, high-quality assets from Bohai Steel will be restructured to form a new company, which will take on 50 billion yuan of the total debt.
Another 60 billion yuan will be issued as bonds by the original holding company, with the local government set to inject an additional 10 billion yuan into the firm. The remaining 80 billion yuan will be retained by the original holding firm or written off.
The proposals are currently being assessed by financial institutions, the report said, citing unidentified sources. ($1 = 6.6707 Chinese yuan) (Reporting by David Stanway and Nathaniel Taplin; Editing by Kim Coghill)
Meanwhile, lookout below, if these two of the Fed’s primary dealers are correct.

In any great organization it is far, far safer to be wrong with the majority than to be right alone.

John Kenneth Galbraith.

Two of Fed’s Own Primary Dealers Warn Shock Hike Awaits Markets

September 20, 2016 — 12:00 AM BST Updated on September 20, 2016 — 5:22 AM BST
There’s uncommon dissent in the ranks of the Federal Reserve’s primary dealers over the central bank’s interest-rate decision this week.

Two of the Fed’s 23 preferred bond-trading partners -- Barclays Plc and BNP Paribas SA -- are betting against their peers and the bond market by forecasting officials will raise rates Wednesday. It’s the first time more than one dealer has gone against the consensus during the week of a policy meeting since last September, data compiled by Bloomberg show. Economists at both banks say traders have too steeply discounted officials’ intent to hike after the Fed has remained on hold for longer than expected.

“There is no perfect time -- there will always be some uncertainties in the data,” said Laura Rosner, senior U.S. economist in New York at BNP. “Despite a multitude of shocks through the last nine months, which have delayed the Fed, hiring has continued to be robust. There is a window of opportunity for the Fed to continue normalizing, and we think it’ll take it.”

----Futures traders are pricing in just a 20 percent likelihood the Fed will lift its policy rate by 0.25 percentage point at its Sept. 20-21 meeting, based on the assumption that the effective fed funds rate will trade at the middle of the new Federal Open Market Committee target range after the next increase. That’s down from more than 40 percent in late August.

We close for the day with yet more sign of rising distress, this time in the “art” world, if modern art is art at all. Now even the nouveau riche have run out of money.

That $100,000 Painting Bought to Flip Is Now Worth About $20,000

Art dealer and collector Niels Kantor paid $100,000 two years ago for an abstract canvas by Hugh Scott-Douglas with the idea of quickly reselling it for a tidy profit. Instead, he is returning the 28-year-old artist’s work to the market this week at an 80 percent discount.
Such is the new art season. At auction houses in London and New York, sellers are preparing to bail on their investments after the emerging-art bubble burst and the resale market for once sought-after artists dried up.
“I’d rather take a loss,” said Kantor, who is offering the Scott-Douglas work at the Phillips auction in New York on Sept. 20. “I feel like it can go to zero. It’s like a stock that crashed.”
Young artists such as Scott-Douglas and Lucien Smith soared with the auction market in 2014, sometimes reaching hundreds of thousands of dollars, when they were traded like bull-market tech stocks. But since auction sales began to drop in late 2015, the emerging names have been hit especially hard. Sales by some artists are down 90 percent or more as the glut of work and nosebleed prices scare away buyers.

That’s because speculators purchase art to resell it, not to keep it.

“When those speculators realize that there is no end user at a higher price, then they scramble to sell the work before they lose everything,” said Todd Levin, director of Levin Art Group, who advises collectors. “The demand is driven by greed, the selloff by fear. It’s Economics 101.”

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 31.15 Moz, Eligible 139.29 Moz, Total 170.44 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, yesterday’s warning from the BIS that China risks blowing up within three years. I have my doubts that it will take that long. There is simply no willingness anywhere on the planet to try to fix the dysfunctional Great Nixonian error of fiat money, communist money, as all nations and trading blocs think that they can still game the failing monetary system to their advantage.

Global banking watchdog warns over Chinese banks

18 September 2016
Risks of a Chinese banking crisis are mounting, according to a warning indicator from the banking industry's global watchdog.

A key gauge of stress in the banking sector is now more than three times above the danger level, the Bank for International Settlements (BIS) said in its latest quarterly review.

China's credit-to-GDP gap hit 30.1 in the first quarter of 2016, it said.

The BIS considers a credit-to-GDP gap of 10 to be a sign of potential danger.

A year ago the BIS quarterly review put the figure for China at 25.4.

The BIS calculates the gap by looking at borrowing in relation to the size of the economy, and comparing that with the long-term trend of that ratio.

When the two start to diverge, the BIS argues, a banking crisis could be on the way.

The BIS has a central position in global finance as it provides banking services to central banks and monitors the international flow of money and credit.
The health of China's banking sector has long been a source of concern for financial markets.
Since the financial crisis of 2007-2008 there has been a boom in credit as the Chinese government has attempted to spur flagging growth.
But some of that lending has not been productive and the IMF estimates that loans worth $1.3 trillion are at risk of default.
However, as the Chinese banking system is largely owned or controlled by the government, analysts say the government would bail out the banking sector if necessary.

China facing full-blown banking crisis, world's top financial watchdog warns

Ambrose Evans-Pritchard19 September 2016 • 7:07am
China has failed to curb excesses in its credit system and faces mounting risks of a full-blown banking crisis, according to early warning indicators released by the world’s top financial watchdog.

A key gauge of credit vulnerability is now three times over the danger threshold and has continued to deteriorate, despite pledges by Chinese premier Li Keqiang to wean the economy off debt-driven growth before it is too late.

The Bank for International Settlements warned in its quarterly report that China’s "credit to GDP gap" has reached 30.1, the highest to date and in a different league altogether from any other major country tracked by the institution. It is also significantly higher than the scores in East Asia's speculative boom on 1997 or in the US subprime bubble before the Lehman crisis.

Studies of earlier banking crises around the world over the last sixty years suggest that any score above ten requires careful monitoring.  The credit to GDP gap measures deviations from normal patterns within any one country and therefore strips out cultural differences.

It is based on work the US economist Hyman Minsky and has proved to be the best single gauge of banking risk, although the final denouement can often take longer than assumed. Indicators for what would happen to debt service costs if interest rates rose 250 basis points are also well over the safety line.

China’s total credit reached 255pc of GDP at the end of last year, a jump of 107 percentage points over eight years.

"As fewer and fewer people have confidence in paper as a store of value, the price of gold will continue to rise. The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

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 prize goes to PhD whizz

00:01, 19 Sep 2016  Lucy Roue

Sebastian Leaper, studying at the University of Manchester, has been announced as the winner of the £50,000 award which is now in its third year.

An innovative PhD student is forging a new application for graphene after winning the Eli and Britt Harari Graphene Enterprise Award 2016.

Sebastian Leaper, studying at the University of Manchester, has been announced as the winner of the £50,000 award which is now in its third year.

This year the prize money will help to fund a new graphene project , which has the potential to revolutionise current desalination methods which are currently costly in terms of energy usage and the need for pre-treatment.

Desalination is a process that removes minerals from saline water.

Using a graphene membrane can help improve the process as fine-tuning its properties can overcome some of the challenges. For example it can allow water to permeate through them with hardly any resistance.
This uses less energy and is not susceptible to clogging. Untreated water can also be used in the membrane, making it low maintenance.
Leaper, 23, who is currently undertaking his PhD within the Graphene NOWNANO Centre for Doctoral Training said: “When you live in Manchester, it’s easy to forget that there’s a global water shortage going on.
“It’s crazy to think that in the 21st Century, there are still people who have to walk miles everyday for such a basic commodity.
“Graphene has promise to unlock the door to low cost, sustainable desalination technology that can end the global water crisis.”
By 2025 the UN expects that 14 per cent of the world’s population will encounter water scarcity.
This technology has the potential to revolutionise water filtration, in particular in countries which cannot afford large scale desalination plants.
Professor Luke Georghiou, Vice President for Research and Innovation said: “Once again we are seeing breakthrough ideas for the commercialisation of graphene coming from our brightest young minds here in Manchester, enabled by the generosity of the Harari Award.
"It is particularly satisfying to see the potential combination of social good and business opportunity that this year’s winner brings us.”
The award is co-funded by the North American Foundation for The University of Manchester through the support of one of the University’s former physics students Dr Eli Harari (founder of SanDisk) and his wife Britt.

The monthly Coppock Indicators finished August.

DJIA: 18401  +18 Up NASDAQ:  5213 +16 Up. SP500: 2171 +18 Up.

No comments:

Post a Comment