Friday, 16 September 2016

USA v EU Trade War?

Baltic Dry Index. 756 -40    Brent Crude 46.23

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

“The world is a place that’s gone from being flat to round to crooked.”

Mad Magazine.

We open today with what looks all too like the USA firing back at the EUSSR in the new and growing trade war between the world’s two top trading economies. The EU hammers Apple for tax avoidance, the USA continues on with its escalating campaign to break the EU and Switzerland’s banks.  Yesterday’s USA target, all too fragile, serial derivatives gambler, Deutsche Bank. Well if you’re going smash a European bank, you might as well make it a bank that when it goes will really hurt.  That it ends badly for both, goes without saying, though in Moscow and Beijing they must be delighted. And both are probably watching events down in Mexico too, where the President’s popularity on Independence Day there, has just hit an all-time low. How long does it take to build The Great Wall of America?

We open today with yesterday’s trade war action. Will poor Mr. Putin get the blame once again?

Deutsche Bank Rebuffs U.S. Over $14 Billion Mortgage Claim

September 15, 2016 — 11:09 PM BST Updated on September 16, 2016 — 4:47 AM BST
Deutsche Bank AG said it won’t pay the $14 billion sought by the U.S. Justice Department to settle an investigation into the firm’s sale of residential mortgage-backed securities, a figure that’s more than triple what some analysts estimated could be a potential worst-case.

“Deutsche Bank has no intent to settle these potential civil claims anywhere near the number cited,” the company said in a statement early Friday in Frankfurt. “The negotiations are only just beginning. The bank expects that they will lead to an outcome similar to those of peer banks which have settled at materially lower amounts.”

Germany’s largest lender confirmed that it had started negotiations with the Justice Department to settle civil claims the U.S. may consider over the bank’s issuing and underwriting of residential mortgage-backed securities from 2005 to 2007. The $14 billion is considered an “opening bid” that could go “much lower,” according to the Wall Street Journal, which reported the figure shortly before Deutsche Bank issued its statement.

U.S. shares of Deutsche Bank tumbled 6.5 percent to $13.80 in extended trading at 7:03 p.m. in New York. The company’s stock has plunged 42 percent this year in Germany through the close of trading Thursday.
Justice Department spokesman Peter Carr declined to comment on the negotiations.

JPMorgan Chase & Co. analysts wrote in a note to clients earlier Thursday that a settlement of about $2.4 billion “would be taken very positively,” and that an agreement exceeding $4 billion would pose questions about the bank’s capital positions and force it to “build additional litigation reserves.”

In other banking news, Europe’s banks are still so unfixed, that they are threatening to dump the incoming new BIS rules. Despite 8 years of oily reassuring words, nothing is fixed, and it’s still too big to fail or jail in European banksterism. Don’t anybody mention old Italy’s Three Card Monte. Yet more reason to stay long fully paid up physical gold and silver held outside of the banking system. The current Great Nixonian Error of fiat money, communist money, is 45 years long in the tooth, increasingly dysfunctional, long ago stopped working for Main Street and savers, and snake bit, is in its final act.

Europe Said to Threaten Revolt Over Bank Capital-Rule Overhaul

September 15, 2016 — 9:35 PM BST
Europeans told the world’s top banking regulator that they’ve had enough.

In two heated meetings in the past week, regulators from countries including Germany and Italy told the Basel Committee on Banking Supervision that proposed changes to how banks assess credit, market and operational risks must be scaled back and slowed down, according to two people with knowledge of the matter.

Some European officials went so far as to say they wouldn’t adopt the proposals on the table, according to the people, who asked not to be identified because the deliberations were private. If the European Union -- home to nearly half of the world’s most systemically important banks -- balks at implementing the Basel Committee’s rules, it could undermine the global regulator’s authority and contribute to fragmentation of the industry.

The Basel Committee is racing to finish work on the post-crisis capital framework known as Basel III by the end of the year, and it’s under instructions not to increase capital requirements significantly in the process. The debate in Basel pits bank regulators from Tokyo to Frankfurt against a U.S.-backed push for stiffer standards, which take effect when they’re implemented by national governments.

The industry says the proposed revisions to risk-assessment rules and limits on banks’ use of their own models to make these calculations would send capital requirements spiraling. Key policy makers have heeded their message. German Finance Minister Wolfgang Schaeuble last week insisted that the Basel Committee not only keep any overall increase in capital requirements to a minimum, but also ensure the rules have no “particularly negative consequences for specific regions,” such as Europe.

Shunsuke Shirakawa, vice commissioner for international affairs at Japan’s Financial Services Agency, has said the regulator needs to “make adjustments” to bring the new rules in on target. The Basel Committee’s members include Japan’s FSA, Germany’s Bundesbank and the U.S. Federal Reserve.

Large European banks may be more vulnerable than their global peers to the changes under discussion. The biggest European banks had an average common equity Tier 1 capital ratio -- a key measure of financial strength -- higher than their global peers at end-2015, according to data from the European Banking Authority and the Basel Committee.

Back in the casino, everyone is back to betting on Apple. It’ll be Facebook or Amazon’s turn next week. What part of “irrational exuberance” in the current stock bubble doesn’t the Fedster’s understand?

U.S. stocks close higher as Apple helps spark broad tech rally

Published: Sept 15, 2016 4:45 p.m. ET

Apple closes 2% or more higher for 4th straight day

U.S. stocks finished higher Thursday, near their intraday highs, as an Apple-inspired rally in the tech sector helped to lift the broader market following a deluge of macroeconomic reports.

The Dow Jones Industrial Average DJIA, +0.99%  closed up 177.71 points, or 1%, at 18,212.48, led by a 3.4% surge in shares of Apple Inc. AAPL, +3.40% All 30 of the Dow components finished in the green.

The S&P 500 index SPX, +1.01% wrapped up 21.49 points, or 1%, to 2,147.26, and all the large-cap gauge’s sectors ended higher, topped by a 1.7% rise in the tech sector and a 1.1% gain in health-care shares.

Meanwhile, the Nasdaq Composite Index COMP, +1.47% enjoyed the sharpest rise among its peers, closing 75.92 points, or 1.5%, higher at 5,249.69, after being up by as many as 81 points. All of the main indexes benefited from Apple’s consistent weekly jump—its fourth consecutive rise of at least 2%. For this week alone, shares are up 12%.

The Cupertino, Calif.-based tech giant has been among best performing shares this week, following strong demand for its new iPhones and upbeat analyst comments. Apple tends to do well in times of market volatility, which has been a major theme this week.

Fans cheer, but Asia gives iPhone 7 subdued welcome

Fri Sep 16, 2016 | 1:32am EDT
Apple Inc (AAPL.O) fans from Sydney to Shanghai, the first customers worldwide to snap the new iPhone 7 off the shelves, cheered as they left stores on Friday brandishing their purchases, flanked by applauding sales staff.

But underneath the usual fanfare, the crowds of enthusiasts and overnight campers were smaller than in past years. Some customers complained after the larger version and models with the new jet-black color sold out.

In part, online pre-ordering has made queues unnecessary for all but diehard fans, and in Chinese stores only those who had ordered in advance were queuing to collect.

Yet in markets like China, online interest in the new phone has also been muted compared to past launches, as cheaper local brands amp up their features, design and marketing.

Wu Ting, a 28-year-old from Nanjing, was surprised to find herself first in line at a downtown Apple store in Shanghai on Friday, a holiday in China.

"I found last year that there were crowds of people, but this year almost no-one. I came an hour early thinking I'd have to wait a long time before getting seen," Wu said.

Sales in China will be the acid test for Apple's year ahead: the success of the iPhone 6 in China drove sales last year, while the slower-burn 6S contributed to Apple's first global revenue drop in over a decade earlier this year.

Chatter about the iPhone 7 launch on Chinese microblog Weibo has been far more muted than when the iPhone 6 debuted in 2014. An index of searches on Baidu Inc (BIDU.O), China's most popular search engine, shows the new phone lagging both the iPhone 6 and iPhone 5.

Apple's Greater China sales dropped by a third in April-June, albeit after more than doubling a year earlier, while its market share has fallen to around 7.8 percent, placing it fifth behind local rivals Huawei, OPPO and Vivo.

Elsewhere, back on planet Earth, the oil glut is about to get seriously larger in Q4 16. While that’s good for some, petrol and fuel oil prices tend to be sticky when prices fall. Main Street just gets a small sliver of price declines, and even then usually with a lag. Compare and contrast with rising crude oil prices.

Oil Glut Set to Worsen as Nigeria and Libya Fields Restart

September 14, 2016 — 6:00 PM BST Updated on September 15, 2016 — 6:26 AM BST
Amid the most enduring global oil glut in decades, two OPEC crude producers whose supplies have been crushed by domestic conflicts are preparing to add hundreds of thousands of barrels to world markets within weeks.
Libya’s state oil company on Wednesday lifted curbs on crude sales from the ports of Ras Lanuf, Es Sider and Zueitina, potentially unlocking 300,000 barrels a day of supply. In Nigeria, Exxon Mobil Corp. was said to be ready to resume shipments of Qua Iboe crude, the country’s biggest export grade, which averaged about 340,000 barrels a day in shipments last year, according to Bloomberg estimates. On top of that, a second Nigerian grade operated by Royal Dutch Shell Plc is scheduled to restart about 200,000 barrels a day of flow within days.
While there are reasons to be cautious about whether the barrels will actually flow as anticipated, a resumption of those supplies -- more than 800,000 barrels a day in all -- could more than triple the global surplus that has kept prices at less than half their levels in 2014. It would also come just as members of the Organization of Petroleum Exporting Countries and Russia are set to meet in Algiers later this month to discuss a possible output freeze to steady world oil markets.

“It’s a good idea to save your money. One day it might be worth something again.”

Mad Magazine.

At the Comex silver depositories Thursday final figures were: Registered 31.18 Moz, Eligible 136.61 Moz, Total 167.79 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, an oldie but goodie, a subject we touched on before, but which gets worse with each passing month on ZIRP, and moves onto steroids on NIRP. Another unintended consequence of the Great Nixonian Error of fiat money, communist money, and our misplaced trust in voodoo central banksters and their version of central planning. The longer the world stay on the The Great Nixonian Error, the greater the malinvestment bubble, the greater the eventual problems at its end.
But so far, there absolutely no sign of any central bankster willingness to address our impending monetary catastrophe. Most likely as usual, it will try to be addressed after catastrophe hits and not before. Stay long fully paid up physical gold and silver held outside of the banking system.
“What me worry?”

The talking chair, with apologies to Mad Magazine.

Looking for 7% in a 0% World

By Lisa Abramowicz July 19, 2016 12:46 PM EDT
It's hard to turn nothing into something. 
So it goes for pension plans, which are finding it increasingly difficult to mint big returns on their investments when benchmark bond yields are at record lows. They face a dilemma of falling short of the returns they rely on or taking perilous risks that could prove catastrophic.
A prime example is the California Public Employees' Retirement System, which is the biggest U.S. public pension fund with about $300 billion of assets. Calpers just posted its worst performance since the credit crisis, gaining a paltry 0.6 percent in the 12 months ended June 30. That's nowhere close to the 7.5 percent return that the system expects to pay its bills.

On the one hand, it's just one year. On the other, it’s the second disappointment in a row and has brought the system's average investment returns to 7 percent a year over the past two decades, below its target, according to the Los Angeles Times.
Falling Returns

Calpers, the biggest U.S. public pension system, reported a second year of disappointing returns

The path only gets harder from here. Pensions generally recognize that and have ratcheted back their expected annual returns in recent years.

The problem is that Calpers, like many other funds, still have pretty high expectations for future returns. In general, private U.S. pensions rely on a 6.9 percent annualized return on investments to send out checks to retirees and meet other obligations, according to median figures tallied by Mercer. About 60 percent of pensions assumed a return of 6 percent to 7.5 percent, the company's data show. Without the expected investment returns over the long run, pensions either need to promise less or get more money through contributions, either from workers or, potentially, taxpayers.

Pensions have steadily reduced their expected annual return targets in recent years

It's increasingly difficult to meet such high targets with any reliability because interest rates around the world are stuck near record lows and trillions of dollars of sovereign debt yield less than nothing.

Thanks, Janet——-Rock-Bottom Yields Dig Hole for Pensions

by Bloomberg Business • September 14, 2016 By Lisa Abramowicz
It’s going to be hard to reverse the damaging effects of ultralow bond yields on the global economy.

A glaring example of the longer-lasting ramifications can be found by looking at big American corporate pensions, which were formed to provide retirees with a reliable income. These plans are now facing their worst deficit in 15 years, with enough money to cover just 76 percent of their estimated $2.1 trillion of liabilities, Wells Fargo analyst Boris Rjavinski wrote in a Sept. 9 note.

“Corporate pensions overall appear to be in worse shape now than at the peak of the crisis,” he wrote. This is especially galling because companies have poured almost $500 billion into their pensions since 2009, which should have put these funds in a better spot right now.
So why are they facing such a dire outlook? Because they’ve been piling into longer-term bonds to avoid the volatile swings of stocks. Their bond allocations climbed to about 42 percent of their holdings last year, compared with 29 percent eight years earlier, the Wells Fargo analysts wrote.
The problem is that longer-term bond yields have dropped to record lows. These pools of bonds are providing a diminishing amount of income at a time when many pensions still rely on 6.5 percent or higher annual returns. The average yield on U.S. 30-year bonds has fallen to 2.4 percent, about one-half the average over the past 15 years.
Rates on long-term European bonds have fallen to 1.2 percent, about one-fourth of the 15-year average.
In Japan, investors are now paying for the privilege of lending to the government for a decade. Not so long ago, they used to earn money on these bonds. These are meaningful declines, which translate to billions of dollars less for pension funds.
And the problem promises to be long term. Even if benchmark yields start to rise meaningfully, it’ll be challenging for these pensions to benefit because they already have such big pools of the lower-yielding notes. Do they sell their existing holdings and lock in losses? Do they liquidate other positions to buy new bonds? Do they plead for more contributions?

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?


September 12th, 2016
Highest-performing bus on the road can serve toughest bus routes on a single charge

Los Angeles, Calif.APTA 2016 September 12, 2016 – Today at the American Public Transit Association (APTA) Annual Meeting, Proterra, the leading innovator in heavy-duty electric transportation, unveiled the newest addition to its fleet of zero-emission vehicles: the Catalyst E2 series, named for its unprecedented Efficient Energy (E2) storage capacity of 440 – 660 kWh.  Last month, an E2 series vehicle achieved a new milestone at Michelin’s Laurens Proving Grounds where it logged more than 600 miles on a single charge under test conditions. Its nominal range of 194 – 350 miles means the Catalyst E2 series is capable of serving the full daily mileage needs of nearly every U.S. mass transit route on a single charge and offers the transit industry the first direct replacement for fossil-fueled transit vehicles.  The high-mileage Catalyst E2 series joins the existing Catalyst FC and XR series vehicles, designed for circulator and intermediate-mileage routes, respectively.

---- 2.6 Million Miles and Counting
With annual sales already 220% higher than 2015, Proterra is experiencing a breakthrough year in the mass transit sector and expects the debut of the Catalyst E2 series to only further magnify this success. Doubling production in 2017 to serve unprecedented customer demand, Proterra will have both of its manufacturing lines in full operation in Greenville, S.C. and the City of Industry, Calif. To date, Proterra buses across the United States have completed over 2.5 million miles of revenue service, displacing 540,000 gallons of diesel, and eliminating over 10 million pounds of carbon emissions.
“Proterra’s primary goal has always been to create a purpose-built, high-performance electric vehicle that can serve every single transit route in the United States. Today, with the unveiling of the Catalyst E2 Series, that goal has been achieved,” said Ryan Popple, CEO of Proterra. “The question is no longer who will be an early adopter of this technology, but rather who will be the last to commit to a future of clean, efficient, and sustainable mobility. With the Catalyst E2 offering a no-compromise replacement for all fossil fuel buses, battery-electric vehicles have now broken down the final barrier to widespread market adoption.”
About Proterra:
Proterra is a leader in the design and manufacture of zero-emission vehicles that enable bus fleet operators to eliminate the dependency on fossil fuels and to significantly reduce operating costs while delivering clean, quiet transportation to the community. Proterra has sold more than 312 vehicles to 35 different municipal, university, and commercial transit agencies throughout North America. Proterra’s configurable EV platform, battery and charging options make its buses well suited for a wide range of transit and campus routes. With unmatched durability and energy efficiency based on rigorous U.S. certification testing, Proterra products are proudly designed, engineered and manufactured in America, with offices in Silicon Valley, South Carolina, and Los Angeles. For more information, visit: and follow us on Twitter @Proterra_Inc.
Proterra Media Contact:

GM says Chevy Bolt electric car will travel 238-miles on one electric charge

Published: Sept 13, 2016 9:07 a.m. ET

The estimate leapfrogs the projected 215-mile range of Tesla’s similarly priced Model 3

General Motors Co. said the Chevrolet Bolt scheduled to go on sale late this year will travel 238 miles on a single electric charge, giving GM a key marketing claim over Tesla Motors Inc. TSLA, +2.04%   as the auto makers prepare to launch the industry’s first long-range, affordable electric vehicles.

Ever since GM GM, +1.34%   revealed a concept of the Bolt in early 2015, the company has said only that its range would top 200 miles. The estimate of 238 miles announced Tuesday leapfrogs the projected 215-mile range of Tesla’s similarly priced Model 3, which is expected to reach the market about a year after the Bolt, in late 2017.

The range advantage could be an important selling point for GM as it seeks an early mover advantage for the Bolt, which GM insiders for years have referred to as their Tesla fighter. GM is looking to reassert itself as an industry leader in electrified cars following Tesla’s surging popularity in recent years.

Still, both the Bolt and Model 3 will mark a big improvement over the roughly 100-mile range of today’s electric cars and could appeal to a broader swath of potential buyers, analysts say. So-called range anxiety—drivers’ fear of the battery running out of juice on longer trips—is one factor that has kept a lid on electric-car sales since auto makers began marketing them several years ago.

Another weekend and while all sensible people get on with enjoying the onset of Autumn or Spring, depending on hemisphere, in my part of the northern hemisphere, enjoying the last of the summer’s blackberries, the peak of the elderberries and crab apples, while waiting on the peak of the apple harvest and the arrival of the sweet chestnut season, those doddery old ditherers at the Fed are trying to figure out how many angels can dance on the point of a pin, so as to determine whether or not to raise US interest rates at next Tuesday-Wednesday’s meeting.  Have a great weekend everyone.

In central banking as in diplomacy, style, conservative tailoring, and an easy association with the affluent count greatly and results far much less.

John Kenneth Galbraith

The monthly Coppock Indicators finished August.

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

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