Thursday, 20 October 2016

China’s Unexpected Win Over Uncle Scam. Recession 2017?

Baltic Dry Index. 872 -18   Brent Crude 52.53

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

“It’s a recession when your neighbor loses his job; it’s a depression when you lose your own.”

Harry Truman

We open today with China winning a big unexpected victory at the WTO against Uncle Sam. Uncle Sam’s response seemed to imply an unwillingness to comply, so presumably America will lodge an appeal.  New US President “X” gets a trade war with China from day one.  Is a US recession on the cards for 2017?

“Recession is when your neighbor loses his job. Depression is when you lose yours. And recovery is when Jimmy Carter loses his.”

Ronald Reagan

China scores WTO victories against some U.S. anti-dumping methods

Wed Oct 19, 2016 | 4:34pm EDT
China won the bulk of a World Trade Organization complaint against certain U.S. methods of determining anti-dumping duties on Chinese products in a WTO dispute panel ruling released on Wednesday.

China brought the complaint in December 2013, one of a string of disputes challenging Washington's way of assessing "dumping," or exporting at unfairly cheap prices.

Specifically, the panel found fault with the U.S. practices of determining dumping margins in certain cases of "targeted dumping," in which foreign firms cut prices on goods aimed at specific U.S. regions, customer groups or time periods.

Dumping is normally found when a foreign producer's U.S. prices are lower than its home market prices for the same or similar goods, or when the imports are sold at prices below production costs.

The panel ruled against the U.S. Commerce Department's practise of "zeroing" in cases involving targeted dumping. In zeroing, the department typically assigns a value of zero any time a producer's export price is above that producer's normal home market price, partly to account for freight and customs charges.

In practice, the zeroing methodology tends to increase the level of U.S. anti-dumping duties on foreign producers.

Some points of China's argument were rejected by the WTO panel, including a claim that the Commerce Department systematically punishes Chinese state enterprise by assigning them high anti-dumping rates.
Either side can appeal the ruling within 60 days.

China's Ministry of Commerce welcomed the ruling saying that the WTO panel had "upheld China's principal claims" on the unlawfulness of targeted dumping and the separate rate applied in certain U.S. anti-dumping measures.

The dispute related to several industries including machinery and electronics, light industry, metals and minerals, with an annual export value of up to $8.4 billion, it said.

"The United States is disappointed by these findings," a spokesman for the U.S. Trade Representative's office said in a statement.

"We will carefully review the report and consider next steps. Nothing in the report will undermine the commitment of the United States to impose antidumping duties to address injurious dumping," the USTR spokesman added.

Fed risks repeating Lehman blunder as US recession storm gathers

 19 October 2016 • 9:15pm
The risk of a US recession next year is rising fast. The Federal Reserve has no margin for error.
Liquidity is suddenly drying up. Early warning indicators from US 'flow of funds' data point to an incipent squeeze, the long-feared capitulation after five successive quarters of declining corporate profits.

Yet the Fed is methodically draining money through 'reverse repos' regardless. It has set the course for a rise in interest rates in December and seems to be on automatic pilot.

"We are seeing a serious deterioration on a monthly basis," said Michael Howell from CrossBorder Capital, specialists in global liquidity. The signals lead the economic cycle by six to nine months.

"We think the US is heading for recession by the Spring of 2017. It is absolutely bonkers for the Fed to even think about raising rates right now," he said.

Up next crude oil, where the market is nervous about any OPEC and others production cuts supposed to take effect from November 30. While few expect much in the way from any OPEC production cuts, the Saudis were out yesterday talking up their book. Any higher oil price might just make a recession in 2017 inevitable. Who would want to be the next US President?

Oil Reaches 15-Month High on Supply Drop, OPEC Outlook

October 18, 2016 — 11:49 PM BST Updated on October 20, 2016 — 12:42 AM BST
Oil advanced to a 15-month high in New York after the government reported that U.S. crude inventories unexpectedly fell last week and Saudi Arabia’s energy minister said many nations are willing to join OPEC production cuts.

Futures jumped 2.6 percent to settle at the highest level since July 2015. The Energy Information Administration reported on Wednesday that nationwide crude supplies dropped by 5.25 million barrels to the lowest level since January in the week ended Oct. 14. Analysts surveyed by Bloomberg had forecast a 2.1 million-barrel increase. OPEC can continue to stabilize the market and other nations have given “strong signals” they will cooperate, Saudi Arabia’s Minister of Energy and Industry Khalid Al-Falih said in London.

“It’s a big draw. It’s a bit of surprise for the market because we are also in peak turnarounds and that’s what makes it so impressive,” Amrita Sen, chief oil economist for Energy Aspects Ltd. in London, said by telephone. Imports to the U.S. have dropped significantly, she said. “If then, on top of this, the OPEC cuts do materialize, our view is that we can see $60 by year-end. A lot depends on what happens between now and November 30.”

Oil has fluctuated near $50 a barrel amid uncertainty about whether the Organization of Petroleum Exporting Countries will be able to implement an accord to reduce crude supply when they gather at an official meeting in November. An OPEC committee will meet later this month to try to resolve differences over how much individual members should pump. OPEC will start with an output freeze, or possibly a small cut, Al-Falih said.

Below, some under reported developments in the energy sector. Did carbon dioxide gas just become the next ethanol feedstock? If so, is Old King Coal suddenly back in the game of energy production in the 21st century? Could China get to modify and clean up all of its dirty coal power plants?

The U.S. has its own ‘oil curse’

Published: Oct 18, 2016 11:45 a.m. ET
The term “oil curse” — coined to describe petro-rich developing countries where the “black gold” came with the heavy price of economic and political instability — is now being adapted for use in the U.S., where “petrostates” and cities are seeing shrinking tax revenues, budget deficits, negative credit ratings, rising unemployment and even outright recession as oil prices have fallen.
Alaska, North Dakota, Wyoming, New Mexico, Louisiana, Oklahoma, and Texas, which enjoyed the feast of the shale revolution, are now threatened with famine. How they weather the storm, analysts now say, could largely determine their fiscal and economic fortunes for the next decade.
In Alaska, poster child of oil-dependent states, lawmakers spent two contentious summer legislative sessions debating how to cover a $4 billion budget deficit. They weren’t alone: Plunging oil prices have drilled holes into state budgets — $2 billion in Louisiana, $1.3 billion in Oklahoma, $1.3 billion in North Dakota — that left lawmakers bickering over how to close the gaps.

“We spend about $1 billion per year on our schools,” Pat Pitney, director of Alaska’s Office of Management and Budget, said in an interview with MarketWatch. “We could close every school in the state and that still wouldn’t be enough to close the budget gap.”

Oil prices CLZ6, +1.13%  dropped a whopping 46% in 2014, then another 31% in 2015. They bottomed in February 2016 at $27.45 per barrel, and while they have since recovered to around $50 a barrel, they are still down 60% from 2014 highs.

These declines have caused a huge revenue gap for states that rely on so-called severance taxes to fund operations.

Severance taxes are imposed on companies that remove nonrenewable resources, such as crude oil and natural gas, from the ground. As oil prices plunged, they declined nationwide up to 50% in the last year, Moody’s said in September. And severance taxes fell 46% from 2014 to 2015, according to the U.S. Census Bureau.
As state legislatures have struggled to cover oil-fueled deficits, credit-ratings firms have issued a flurry of rating cuts. Standard & Poor’s in January downgraded Alaska’s credit rating to AA+ from AAA, while Moody’s has revised several states’ outlook to negative — North Dakota in March, Kansas in May and Oklahoma in June.
Some states’ unemployment numbers have crept higher, suggesting that the problem is rippling through their economies.
Between February 2015 and June 2016, Wyoming’s jobless rate grew by almost two whole percentage points to 5.6% from 3.8%. The problem was more pronounced in certain oil-reliant counties and cities: In Lafayette, La., the jobless rate jumped to 6.1% in May, while in Kern County, Calif., it skyrocketed to 9.6%, nearly double the national unemployment rate.

Scientists Accidentally Discover Efficient Process to Turn CO2 Into Ethanol

The process is cheap, efficient, and scalable, meaning it could soon be used to remove large amounts of CO2 from the atmosphere.

Oct 17, 2016
Scientists at the Oak Ridge National Laboratory in Tennessee have discovered a chemical reaction to turn CO2 into ethanol, potentially creating a new technology to help avert climate change. Their findings were published in the journal ChemistrySelect.

The researchers were attempting to find a series of chemical reactions that could turn CO2 into a useful fuel, when they realized the first step in their process managed to do it all by itself. The reaction turns CO2 into ethanol, which could in turn be used to power generators and vehicles.
The tech involves a new combination of copper and carbon arranged into nanospikes on a silicon surface. The nanotechnology allows the reactions to be very precise, with very few contaminants.
"By using common materials, but arranging them with nanotechnology, we figured out how to limit the side reactions and end up with the one thing that we want," said Adam Rondinone.
This process has several advantages when compared to other methods of converting CO2 into fuel. The reaction uses common materials like copper and carbon, and it converts the CO2 into ethanol, which is already widely used as a fuel.

Perhaps most importantly, it works at room temperature, which means that it can be started and stopped easily and with little energy cost. This means that this conversion process could be used as temporary energy storage during a lull in renewable energy generation, smoothing out fluctuations in a renewable energy grid.

Finally a look at Brexit from a German perspective. They seem to have finally woken up to the lose-lose consequences of not tossing a bone to Dodgy Dave Cameron’s earlier tour of Europe’s capitals seeking reform “we can believe in.” Instead sent back from Berlin to wave an empty envelope at UK voters, that tour of Europe’s capitals turned into DC’s farewell tour. It will probably go down in history as a missed opportunity gaffe.

German pharma, transport sectors to feel most Brexit pain: study

Wed Oct 19, 2016 | 11:04pm EDT
Germany's pharmaceutical and transport industries - including the aerospace and rail construction businesses - are likely to suffer most from Britain leaving the European Union, a study showed on Thursday.

The Mannheim-based ZEW think tank found these sectors were the most exposed in Germany to the fallout from Brexit but that smaller European countries would take a bigger trade hit.

It said countries such as the Netherlands, Switzerland and Belgium would suffer more than Germany, which has a high degree of diversification of trading partners and business sectors.

Brun-Hagen Hennerkes, chairman of the Family Enterprise Foundation which commissioned the research, said the economic fallout from Brexit was nonetheless hard to predict.

"Even if the German economy is doing well and tax revenues are churning, no one can really foresee the consequences of Brexit," he said in a statement. "No one should rely on the monetary policy of ECB President Mario Draghi."

Fighting the risk of deflation, the European Central Bank has cut interest rates into negative territory, regularly offers banks free loans and has already bought over 1 trillion euros of assets, hoping to boost lending, economic growth and in turn inflation.

“Suckers think that you cure greed with money, addiction with substances, expert problems with experts, banking with bankers, economics with economists, and debt crises with debt spending”

Nassim Nicholas Taleb

At the Comex silver depositories Wednesday final figures were: Registered 29.29 Moz, Eligible 144.20 Moz, Total 173.49 Moz. 

Crooks and Scoundrels Corner

The bent, the seriously bent, and the totally doubled over.
Today, a closer look at the Brexit court case in London. In the 21st century, can British judges really block the voting majority on something Parliament specifically asked them to vote on?

Legal Case for Brexit Is Surprisingly European

Oct 19, 2016 2:00 AM EDT
Is Brexit unconstitutional? That’s the key issue in a suit argued this week before the High Court in London. What makes the question especially piquant is that Britain doesn’t have a single written constitution, but rather a complex tradition of constitutional law made up of principles, precedents and practices accrued over generations.

Under those principles, the answer to whether the U.K. can leave the European Union without a parliamentary vote is … maybe. It seems most likely that the High Court -- or the Supreme Court, which will hear an appeal next -- will say that Brexit can be accomplished without it. But to reach that conclusion, the British courts will have to expand existing principles, and grapple with the meaning of the referendum as a political tool. It’s a sad day for the country that arguably invented representative government.

The constitutional argument against Brexit is clever and powerful. It’s being made by David Pannick, a member of the House of Lords and a particularly skilled and brilliant barrister. As articulated before the court -- and in an op-ed article in the Times of London this past summer -- it runs like this:

A well-recognized principle of the U.K. constitution is that one law enacted by Parliament may only be changed by another law. Parliament enacted the European Communities Act in 1972. That law, which opened the way for the U.K. to join the European Economic Community, says that European laws apply in the U.K.

European law today includes lots of individual rights, including those found in the European Declaration of Human Rights. Once the U.K. leaves the EU, the rights will no longer apply to Britons. Hence, Pannick says, the U.K. can’t leave the EU without a law authorizing withdrawal. And a law requires an act of Parliament.

If accepted by the courts, Pannick’s argument would have the effect of blocking Prime Minister Theresa May’s government from invoking Article 50 of the EU treaty, which allows member states to withdraw. The government would need to go to Parliament, which would say no -- and Brexit would be blocked.

So is Pannick right? There’s a somewhat plausible technical response to his claims. It says essentially that since the 1972 law incorporates European law, and Article 50 of the EU treaty is European law, there’s no need for another act of Parliament, because the 1972 law isn’t really being revoked but simply relied upon to withdraw.

'You just never know. That unpredictability is the great thing about life. You change. The world changes. You live in a country where we are still blessed with enormous opportunity. Leave yourself open to the world of possibility. You have the ambition, you have the smarts and you have the toughness. So, turn the page on your biography - you have just started a new chapter in your lives.'

Lloyd Blankfein CEO of Goldman Sachs unintentionally backs Brexit in a US speech to graduates, mid 2016.

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?

Diamonds aren't forever: Team creates first quantum computer bridge

Date: October 14, 2016

Source: Sandia National Laboratories

Summary: For the first time on a single chip, scientists have demonstrated all the components needed to create a quantum bridge to link quantum computers together.
By forcefully embedding two silicon atoms in a diamond matrix, Sandia researchers have demonstrated for the first time on a single chip all the components needed to create a quantum bridge to link quantum computers together.
"People have already built small quantum computers," says Sandia researcher Ryan Camacho. "Maybe the first useful one won't be a single giant quantum computer but a connected cluster of small ones."
Distributing quantum information on a bridge, or network, could also enable novel forms of quantum sensing, since quantum correlations allow all the atoms in the network to behave as though they were one single atom.
The joint work with Harvard University used a focused ion beam implanter at Sandia's Ion Beam Laboratory designed for blasting single ions into precise locations on a diamond substrate. Sandia researchers Ed Bielejec, Jose Pacheco and Daniel Perry used implantation to replace one carbon atom of the diamond with the larger silicon atom, which causes the two carbon atoms on either side of the silicon atom to feel crowded enough to flee. That leaves the silicon atom a kind of large landowner, buffered against stray electrical currents by the neighboring non-conducting vacancies.
Though the silicon atoms are embedded in a solid, they behave as though floating in a gas, and therefore their electrons' response to quantum stimuli are not clouded by unwanted interactions with other matter.
"What we've done is implant the silicon atoms exactly where we want them," said Camacho. "We can create thousands of implanted locations, which all yield working quantum devices, because we plant the atoms well below the surface of the substrate and anneal them in place. Before this, researchers had to search for emitter atoms among about 1,000 randomly occurring defects -- that is, non-carbon atoms -- in a diamond substrate of a few microns to find even one that emitted strongly enough to be useful at the single photon level."

The monthly Coppock Indicators finished September

DJIA: 18308  +28 Up NASDAQ:  5312 +21 Up. SP500: 2168 +32 Up.

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