Wednesday, 7 September 2016

The View From Russia Plus Cash In A Box.

Baltic Dry Index. 745  +21     Brent Crude 47.57

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

“When you develop your opinions on the basis of weak evidence, you will have difficulty interpreting subsequent information that contradicts these opinions, even if this new information is obviously more accurate.”

Nassim Nicholas Taleb, The Black Swan

Since it was largely unreported, at least here in the UK mainstream media, today we focus on the view of the world from President Putin’s perspective. Compared to the American War Party in the District of Crooks, the view from Moscow seems sane and balanced.

But first this wobble from Germany and news from ever more bizarre Switzerland. Hanjin Shipping’s problems grow.

German Factory Orders Undershoot Forecast as Momentum Cools

September 6, 2016 — 7:00 AM BST Updated on September 6, 2016 — 7:51 AM BST
German factory orders increased less than forecast in July as domestic weakness damped a surge in investment-goods demand from the euro area.
Orders, adjusted for seasonal swings and inflation, rose 0.2 percent from June, when they fell a revised 0.3 percent, data from the Economy Ministry in Berlin showed on Tuesday. The median in a Bloomberg survey was for an increase of 0.5 percent. Orders were down 0.7 percent from a year earlier.
The report follows a series of data signaling that economic momentum in Europe’s largest economy has cooled. Business confidence slumped the most since 2012 in August and a gauge for private-sector activity fell to the lowest level in 15 months. Still, the Bundesbank maintained in its last monthly report that growth should pick up in the current quarter.
“Data suggest that in the summer the German economy won’t be able to maintain the fast pace observed in the first half of the year,” said Stefan Kipar, an economist at BayernLB in Munich. “We expect a slight economic slowdown in the second half.”

Cash in a Box Catches On in Switzerland as Negative Rates Bite

September 6, 2016 — 9:33 AM BST
It’s a sign the world is getting used to negative interest rates when what once seemed bizarre starts looking like the norm.
Consider Switzerland, where more and more companies are taking out insurance policies to protect cash hoards from theft or damage.
“Because of the low interest rate level, we note increasing demand for insurance solutions for the storage of cash,” said Philipp Surholt at Zurich Insurance Group AG, among underwriters reporting a surge in such requests. “We’re seeing demand for coverage for sums ranging from 100 million to 500 million francs.”
The Swiss National Bank imposed sub-zero rates in early 2015, effectively charging banks for excess deposits. Many lenders including UBS Group AG and Credit Suisse Group AG have passed on at least some of the charge -- they don’t disclose how much -- to cash-rich clients like asset managers and big companies.
While the central bank is seeking to rein in the franc, negative interest rates have side effects that over time could outweigh the benefits. That risk may be on the minds of SNB officials when they meet next week for their scheduled quarterly monetary policy review. Economists expect they will keep the rate steady at minus 0.75 percent, the lowest among major central banks.
“The SNB’s dilemma is that it can’t make everyone happy,” said Alexander Koch, an economist at Raiffeisen Schweiz. “In its attempt to get the best deal for the Swiss economy, it also has created losers and collateral damage.”
Helvetia Holding AG said it charges about 1,000 francs ($1,020) a year to insure 1 million francs. While that’s only a fraction of the 7,500 francs a company would pay to park the same amount in a bank for a year -- assuming the lender passes on the full charge -- it doesn’t include the cost of logistics such as transport or security features like reinforced walls, guards and alarm systems.

Companies need to save a lot on bank fees for cash storage to be economical because, in addition to insurance, they have to assume the costs of managing the money, said Roberto Brunazzi, a spokesman for Baloise Holding AG. He said the company has long offered coverage for cash stores “but there has been a noticeable increase and now it’s becoming more commonplace.”

Switzerland’s continued use of high-denomination banknotes adds to the appeal of self-storage: About 1 million francs worth of 1,000-franc bills can fit in a small box.

Hanjin’s Ghost Ships Seek Havens With Food and Water Starting to Dwindle

September 7 2016
South Korea’s cash-strapped Hanjin Shipping Co. is adrift at sea -- and in more ways than one.

Hanjin is one of the world’s biggest shipping lines and filed for bankruptcy protection last week in Seoul. That’s created a bizarre situation on the high seas for 85 Hanjin ships that have been effectively marooned offshore as ports in the U.S., Asia and Europe have turned the company’s ships away. The worry is that Hanjin ships won’t be able to pay port fees or their contents might be seized by creditors, which would disrupt port operations.

The South Korean shipping company operates 97 container ships, the giant workhorses of global trade that deliver everything from cars and clothing to televisions and toys. The global shipping disruption comes just as companies are shipping merchandise to fill shelves and warehouses for the end-of-year holiday season.

----On Tuesday, South Korean authorities rushed to piece together a capital injection. Hanjin Group will provide 100 billion won ($90 million), including 40 billion won from Chairman Cho Yang Ho, to help contain disruptions in the supply chain, the group said in an e-mailed statement. At the same time, South Korea’s ruling Saenuri Party asked the government to offer about 100 billion won in low-interest loans to the shipping line if Hanjin Group provides collateral, Saenuri lawmaker Kim Gwang Lim said in a statement.

South Korea’s Ministry of Oceans and Fisheries estimates Hanjin Shipping needs more than 600 billion won to cover unpaid costs like fuel, including about 100 billion won immediately for payments such as to port operators to unload cargo from stranded ships, Kim said in the statement.

The company, meanwhile, has started providing food, water and daily necessities to crews on six Hanjin ships anchored at ports including Rotterdam and Singapore. About 70 container movers and 15 bulk ships are stranded at 50 ports in 26 countries, according to Hanjin.

Now back to the under reported news from Russi. The view of the world from President Putin’s perspective. The whole Bloomberg transcript is well worth the read.

Putin Discusses Trump, OPEC, Rosneft, Brexit, Japan (Transcript)

September 5, 2016 — 8:00 AM BST
Russian President Vladimir Putin talked with Bloomberg News Editor-in-Chief John Micklethwait on Sept. 1 about the U.S. elections, accusations that Russia was involved in the hacking of thousands of Democratic National Committee emails and documents, a possible oil-freeze deal with OPEC, plans to sell a stake in Rosneft PJSC, the relationship between Japan and Russia, and the future of the euro area after the U.K.’s vote to leave the European Union.

Click here to read the transcript in Russian.
(This is not a legal transcript. Bloomberg LP cannot guarantee its accuracy.)

MICKLETHWAIT: President Putin, thank you very much for talking to Bloomberg. We’re here at Vladivostok, on the edge of the Pacific and on the eve of your second Eastern Economic forum. What do you hope to achieve at it?

PUTIN: It’s a way to capture the attention of our partners, potential investors in Russia’s Far East. In this sense, this event, this occasion is not much different from other regional forums of this kind. We hold a lot of them in Russia, such as the economic forum in St. Petersburg -- usually we hold that in the summer, at the beginning of summer -- or the economic forum in Sochi.

The Far East has particular importance for us, with priority given to the development of this region. In the past few years, let’s even say in recent decades, we have encountered many problems here. We paid little attention to this area, and it deserves far more because enormous riches and opportunities for Russia’s future development are concentrated here. Not only for the development of Russia itself, but the development of the whole Asia-Pacific region, because this land is very rich in natural and mineral resources.

Usually when we talk about the Far East, we have in mind the Far East proper: the Primorye region, the Khabarovsk region, Kamchatka, Chukotka. But it’s also the area called Eastern Siberia. Now, if we take them all together, these lands contain colossal resources -- oil, gas, say, 90 percent of Russia’s tin, 30 percent of Russia’s gold, 35 percent of its timber. Seventy percent of Russia’s fish are caught in these waters.

This is a region where the transport, rail infrastructure is well developed. And in recent years we have been busy developing the road network. There’s huge potential! Opportunities for the development of the aviation industry, space industry. If you noticed, we opened a new cosmodrome in one of the regions of the Far East. Traditionally, aviation, as I said, has been developed here, including military aviation, -- the world famous Sukhoi fighter jet is manufactured in the Far East of Russia.

Finally, we have resumed the production of ships, especially for civilian use. Just today, I witnessed the start of work at one of the very promising platforms in this regard.

It’s also a very good opportunity for humanitarian exchanges with our neighbors. We’re proposing to develop musical activities, exhibitions, theatrical events here. Our outstanding musician and conductor Mr. Gergiev performed here very recently; we’re opening a branch of St. Petersburg’s Mariinsky Theater here. We also plan to open branches of St. Petersburg’s Hermitage Museum here and the Vaganova Ballet Academy.

---- MICKLETHWAIT: You seem to be more relaxed about territory on your Asian front. We mentioned the Kurils, you gave the island of Tarabarov back to China. You’re not, you wouldn’t consider giving Mrs. Merkel back Kaliningrad as a tribute?
PUTIN: We didn’t give anything away. These were territories that were disputed, and we held negotiations with the People’s Republic of China about them for 40 years and finally found a compromise. Part of the territory was permanently assigned to Russia and part of the territory permanently assigned to the People’s Republic of China. I want to stress that this was possible only -- and this is very important -- against the backdrop of a very high level of trust that had been developed between Russia and China by that time. And if we can reach a similarly high level of trust with Japan, then we can find some compromises.
But there’s a fundamental difference between the question connected with the Japanese story and, let’s say, our negotiations with China. What is it? It’s that the Japanese issue arose as a result of World War II and is set out in international documents linked to the results of the Second World War. Our discussions with our Chinese friends about border issues had nothing to do with World War II or any military conflict. This is the first, or rather, I should say, the second point.
Third, about the western part. You spoke of Kaliningrad.
MICKLETHWAIT: I meant it as a joke.
PUTIN: But I’ll tell you without joking: if someone wants to start revisiting the results of World War II, well, let’s try to debate that topic. But then we need to debate not only Kaliningrad but the whole thing, from the eastern part of Germany to Lviv, which was part of Poland, and so on and so forth. There’s also Hungary and Romania. If someone wants to open that Pandora’s box and start to work with it, go ahead. Take up the flag and go for it.
---- MICKLETHWAIT: Just listening to you speak I wondered if you look back, you know, you became president first back in 2000. I wonder if you look back over that period whether you think Russia has become a little bit more an Asian country and a little bit less a European one?
PUTIN: You know, it’s become a more developed country. You know, I don’t want to draw a line between Asians and Europeans. The issue is on another level, on the level of development. The size of the Russian economy grew by 70 percent, nearly doubled. And by purchasing-power parity, Russia’s economy is now currently the fifth or sixth-largest in the world.
It’s completely clear that 10-15 years ago we couldn’t have responded to the sanctions that were implemented against Russia with retaliatory measures, say, in agriculture. We couldn’t have closed our market to agricultural goods from countries that acted in such an unfriendly manner toward Russia because we couldn’t have supplied the domestic market with food of our own. And now we can. That’s the first point.
Secondly, the freeing of our market gives our farmers an opportunity to increase production within the country. We had an overall decline in GDP connected to a whole series of events, not only sanctions, but also purely objective issues related to global economic trends; there’s been a slight decline in GDP and industrial production. Yet agriculture is growing at 3 percent a year -- growing steadily. And that’s stable growth. This year it will be 3 percent, maybe more, and next year too.
Therefore, if we’re talking about what took place over, let’s say, the last 15 years, then it’s a lot. But that’s not the only thing. Another thing is that the Russian economy has become significantly healthier. In 2000, we had $12 billion in gold and foreign-currency reserves and more than $20 billion in external debt.
Now Russia is among the top 10 countries with the healthiest ratio of external debt to reserves. On the first of last month we had nearly $400 billion in reserves, $395 billion, and foreign debt of only about 13 percent of GDP. That ratio is considered one of the best in the world.
We had a third of the population living below the poverty line, more than 40 million people. That number has now fallen by nearly two-thirds. Over the past year or year and a half, unfortunately, it has increased a bit given the economic difficulties and the overall decline in the population’s wages, but it’s still incomparable to what it was 15 years ago.
For example, pensions have increased several times over, real wages have grown, they’re incomparable to what they were. These components got us to what we were fighting for, which is at the core of every state’s development: demographics. In the early 2000s it seemed that we wouldn’t be able to reverse the negative demographic trend. The population of Russia was declining by nearly 1 million people annually, 900,000 each year. Now over the last three years we’ve observed natural population growth. We have the lowest…
MICKLETHWAIT: You’ve encouraged romance.
PUTIN: To our credit, we now have the lowest level of infant mortality and maternal mortality in our recent history, and I think even going back to the Soviet period. We’ve set a goal to increase life expectancy. Over the past five years it’s grown at a much higher rate than we planned. All of this gives us reason to believe that we were on the right track. Of course there’s a lot we could and should still do and we probably could have attained greater results but on the whole we’re moving in the right direction.

At the Comex silver depositories Tuesday final figures were: Registered 28.20 Moz, Eligible 134.72 Moz, Total 162.92 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, what’s wrong with this? China’s Anbang: an insurance company or a Chinese laundry?

Behind China’s Anbang: Empty Offices and Obscure Names

By SEPT. 1, 2016
In the center of Beijing’s booming commercial district, with soaring office towers, gleaming shopping malls and luxury apartment complexes, sits a shabby, four-story building with an office that houses stupendous wealth.

To get there, visitors must first pass through an unmarked entrance next to a gray-tiled post office, then pass through a maze of carelessly strung phone and power lines. On the fourth floor, down a hallway where black scuff marks on the walls indicate years of neglect, is the Hujialou Concentrated Office Zone, an officially sanctioned domicile for shell companies.

According to government records, that office is home to two companies with a total stake that accounts for more than $15 billion in assets of one of China’s biggest financial conglomerates: the Anbang Insurance Group.

Prying visitors are not welcome. A woman at the office, who did not give her name, grew angry when a journalist told her that two companies there controlled a large share of Anbang.

“We’re just a private company, helping others register with the State Administration for Industry and Commerce,” she said, referring to the keepers of China’s corporate database. “It is none of our business whether they are shell companies.”

Another Anbang shareholding firm — one that controls $5.6 billion in assets — lists its address a few blocks away from the Hujialou building, at an office tower’s empty 27th floor.

Near the Temple of Heaven, the former imperial religious complex in Beijing, the listed address of yet another shareholding company turns out to be another empty office. The directory downstairs lists the former tenant: a shoe seller.

A group of 39 companies control Anbang, which was once a sleepy insurance company and now has $295 billion in assets and a reputation as an ambitious global deal maker. Many of those companies are in turn owned by a welter of shell companies, many with similar names and addresses or common owners.

Ultimately, as The New York Times reports, they are controlled by about 100 people, many of whom hail from a county called Pingyang on China’s east coast. Pingyang County is the home county of Anbang’s chairman, Wu Xiaohui.

In any major country, the shareholders of marquee companies are often household names themselves. General Electric counts major institutional investors such as the Vanguard Group and BlackRock as top owners. Berkshire Hathaway’s biggest shareholder is its chairman, Warren E. Buffett.

China is no exception. Dalian Wanda Commercial Properties, for example, led by China’s richest man, Wang Jianlin, may match Anbang in the breadth of its political connections, but many of its biggest shareholders are easily recognizable Chinese companies like China Life Insurance.

Anbang is different. The companies that own it, and the people who back them, are almost all obscure. Two state-owned companies that collectively own less than 2 percent of Anbang are the only exceptions. I first started writing about Chinese companies 16 years ago and have never seen a similar ownership structure at a major company.

That is remarkable, given Anbang’s increasing size and prominence. Earlier this year, Anbang came close to executing what would have been the biggest takeover ever of an American company by a Chinese company, offering more than $14 billion for Starwood Hotels & Resorts.

In China, the company not only sells auto and life insurance, but also controls a major bank in southwestern China, is the largest shareholder of one of the country’s biggest financial conglomerates, China Minsheng Banking Corporation, and is the second-largest shareholder in another, China Merchants Bank.

But China is not an offshore haven like the Cayman Islands or the British Virgin Islands. The country’s online corporate records system allows those with patience to find the names behind the holding companies, even if — as with Anbang — the corporate shareholders frequently change names, addresses and owners.

After more than three months of combing through thousands of pages of records, The Times was able to piece together a corporate history for those 39 shareholders. One clear pattern emerged. At least 35 of the companies, collectively owning more than 92 percent of Anbang, can trace all or part of their ownership to relatives of Mr. Wu or to his wife, Zhuo Ran, who is the granddaughter of the former Chinese leader Deng Xiaoping; or to Chen Xiaolu, the son of one of China’s most famous marshals, who helped Mao’s Communists to victory in 1949. Those relatives are either current or former owners or directors of those companies, or current or former owners of predecessor firms.
 “If you hear a "prominent" economist using the word 'equilibrium,' or 'normal distribution,' do not argue with him; just ignore him, or try to put a rat down his shirt.”
 Nassim Nicholas Taleb, The Black Swan

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?

For first time, carbon nanotube transistors outperform silicon

Date: September 2, 2016

Source: University of Wisconsin-Madison

Summary: For decades, scientists have tried to harness the unique properties of carbon nanotubes to create high-performance electronics that are faster or consume less power. Now, for the first time, materials engineers have created carbon nanotube transistors that outperform state-of-the-art silicon transistors.
For decades, scientists have tried to harness the unique properties of carbon nanotubes to create high-performance electronics that are faster or consume less power -- resulting in longer battery life, faster wireless communication and faster processing speeds for devices like smartphones and laptops.
But a number of challenges have impeded the development of high-performance transistors made of carbon nanotubes, tiny cylinders made of carbon just one atom thick. Consequently, their performance has lagged far behind semiconductors such as silicon and gallium arsenide used in computer chips and personal electronics.
Now, for the first time, University of Wisconsin-Madison materials engineers have created carbon nanotube transistors that outperform state-of-the-art silicon transistors.
Led by Michael Arnold and Padma Gopalan, UW-Madison professors of materials science and engineering, the team's carbon nanotube transistors achieved current that's 1.9 times higher than silicon transistors. The researchers reported their advance in a paper published Friday (Sept. 2) in the journal Science Advances.
"This achievement has been a dream of nanotechnology for the last 20 years," says Arnold. "Making carbon nanotube transistors that are better than silicon transistors is a big milestone. This breakthrough in carbon nanotube transistor performance is a critical advance toward exploiting carbon nanotubes in logic, high-speed communications, and other semiconductor electronics technologies."
This advance could pave the way for carbon nanotube transistors to replace silicon transistors and continue delivering the performance gains the computer industry relies on and that consumers demand. The new transistors are particularly promising for wireless communications technologies that require a lot of current flowing across a relatively small area.
As some of the best electrical conductors ever discovered, carbon nanotubes have long been recognized as a promising material for next-generation transistors.
Carbon nanotube transistors should be able to perform five times faster or use five times less energy than silicon transistors, according to extrapolations from single nanotube measurements.

The monthly Coppock Indicators finished August.

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

No comments:

Post a Comment